Liquidity Providing

Adding Liquidity couldn't be any easier....
The CaviarSwap V2.2 Engine is unique solution to providing liquidity to a DEX by allowing liquidity to be added in a Single Token
Every token has value, let's put it to work and earn some fees!
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What's the point of Liquidity Providing?

Like any liquidity providing, the point is to use your token(s) to earn fees through other peoples trades on the DEX
  • Providing liquidity in a token(s) that never trades, wont't earn you any fees from the trading
  • If you provide liquidity in something that has a lot of liquidity already, your tokens are helping the DEX so you will earn, but less (because there are already lots of tokens)
  • if you provide liquidity in a token with high volatility, volume and smaller liquidity you will earn more and take a higher proportion, though if the price of your token changes a lot vs the basket you might still make a loss when you remove your liquidity
Like all LP, you want a relatively stable price range with decent volume trading and you'll make a return

Traditional Pairwise LP

With conventional pair-based AMMs:
  • You add both tokens of the pair in equivalent value - eg XRD and CAVIAR together
  • In return you get a liquidity token representing your share of the combined liquidity
  • Trades done in that pair accrue fee revenue
  • When you remove liquidity you get back your percentage share of the two tokens in the pool
  • This includes your share of the fee revenue for this pair
  • The Token ratios may have changed (eg you could get back more CAVIAR, less XRD)
  • This balance reflects IL (impermanent loss) versus fees earned

Single Token LP

With CaviarSwap V2.2:
  • You add one token (or many but assume 1 here) - eg CAVIAR
  • In return you receive a liquidity token representing your share of that current token’s worth
  • You accrue fee revenue for trades where your token was used
  • When you remove liquidity you get back:
    • Your percentage share of the current token’s worth
    • This includes your share of the fee revenue
    • In rare circumstances other tokens are returned instead of your originally staked token