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!

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