1. Why be an LP? What's the risk and reward?
This piece is written by @Edyta from Phezzan Discord server
Liquidity providers send various assets that they own to liquidity pools. They bring liquidity to the protocol.
- 1.Receiving fees from trades that occurs in the pools they contribute;
- 2.In some exchanges, LP can receive protocol native tokens;
- 3.In some exchanges, LP can receive LP tokens which they can stake if they want and get extra yield.
- 1.Can be exposed on impermanent loss;
- 2.Protocol might be hacked and assets can be stolen.
- 3.Can get liquidated (partially or completely).