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Liquidity

Adding Liquidity​

Adding liquidity to pools enables liquidity providers to earn fees from swaps executed against their liquidity. Users can deposit a combination of Fixed Tokens and Loan Tokens at a specific tick. In return, they receive liquidity shares representing their pro-rata stake in the tick. Because each tick is independent, if a user wants to add liquidity across a tick range, he must execute multiple add liquidity transactions.

When providing liquidity the Pool Manager will enforce the following:

  • When adding Loan Tokens to a tick, the protocol ensures that users do not add them below the pool's highest tick with Fixed Tokens.
  • Similarly, when adding Fixed Tokens to a tick, the protocol ensures that users do not add them above the pool's lowest tick with Loan Tokens.
  • At any given time, only one tick can hold positive balances in both Loan Tokens and Fixed Tokens. This is referred to as the spot tick.
  • When adding liquidity at the spot tick, liquidity providers must do so proportionally. This prevents LPs from instantly adding liquidity in one token and redeeming in a mix of tokens, effectively swapping tokens without invoking the swap function.

Liquidity positions are non-transferable.

Withdrawing Liquidity​

Liquidity providers can redeem their liquidity position by burning their shares to withdraw a proportional amount of the tokens held in the tick. When withdrawing a liquidity position, users must redeem their entire position.