Liquidity Pools and Adding Liquidity
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MegaBSC pools allow you to provide liquidity by adding your tokens to liquidity pools or “LPs”.
When you add your token to a liquidity pool (LP), you will receive Flip tokens (MegaBSC’s version of liquidity provider tokens).
As an example, if you deposited $MEG and $BNB into a liquidity pool, you would receive MEG-BNB FLIP tokens.
The number of FLIP tokens you receive represents your portion of the MEG-BNB liquidity pool. You can also redeem your funds at any time by removing your liquidity.
It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. Whenever someone trades MegaBSC, the trader pays a 0.2% fee, of which 0.17% is added to the liquidity pool of the swap pair they traded on.
For example:
There are 10 FLIP tokens representing 10 MEG and 10 BNB tokens.
1 Flip token = $1 MEG + $1 BNB
Someone trades 10 MEG for 10 BNB.
Someone else trades 10 BNB for 10 MEG.
The MEG/BNB liquidity pool now has 10.017 MEG and 10.017 BNB.
Each FLIP token is now worth 1.00017 MEG + 1.00017 BNB.
To make being a liquidity provider even more worth your while, you can also put your FLIP tokens to work whipping up some fresh yield on the MEG farms, while still earning your 0.17% trading fee reward.
Providing liquidity is not without risk, as you may be exposed to impermanent loss.