πŸ’§Liquidity Pools and Adding Liquidity

MegaBSC pools allow you to provide liquidity by adding your tokens to liquidity pools or β€œLPs”.

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.

Providing liquidity is not without risk, as you may be exposed to impermanent loss. β€œSimply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman​

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.

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