Pools & Liquidity
Every swap on SUBFROST trades against a liquidity pool: a shared reserve of two tokens that anyone can contribute to. When you provide liquidity to a pool, you deposit a pair of tokens and earn a share of the fees that the pool generates (from people swapping through it).
How it works
- A pool holds two assets (for example DIESEL and frBTC). The price adjusts automatically as people trade, so you always have a counterparty.
- When you add liquidity, you receive an LP position representing your share of the pool.
- As swaps happen, they pay a fee that accrues to the pool, so your position grows over time.
- You can withdraw your liquidity (plus accrued fees) at any time by redeeming your LP position.
The swap fee, and what you earn
A swap pays 1% by default, split two ways:
| Share | Rate | Goes to |
|---|---|---|
| Liquidity providers | 0.8% | the pool, so it accrues to your position |
| Protocol | 0.2% | permanently to the AMM protocol |
So as a liquidity provider you earn 0.8% of the volume that trades through your pool, in proportion to your share of it.
Providing liquidity
- Click "Liquidity" on the swap page to add positions to a pool.
- On the Add tab, choose the pair you want to provide.
- Deposit the two tokens in the pool's ratio. The app fills in the paired amount for you and shows the Minimum Deposit.
- Confirm and sign. You now hold an LP position and start earning a share of that pool's swap fees.
Removing liquidity
- Click "Liquidity" on the swap page and switch to the Remove tab.
- Choose the LP position you want to remove.
- Set the Amount to Remove. The app shows the Minimum Received for each of the two tokens, quoted against current reserves.
- Confirm and sign. Your share of the pool, plus the fees it accrued, returns to your wallet.
Next steps
- FIRE Vault: stake your LP and earn FIRE, or buy FIRE through bonds.
- Swap: the other side of the pool.