Liquidity Pools and Adding Liquidity

DollSwap 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 Doll LP tokens (DollSwap’s version of liquidity provider tokens).

As an example, if you deposited $DOLLand $BNB into a liquidity pool, you would receive DOLL-BNB DOLL LP tokens.

The number of DOLL LP tokens you receive represents your portion of the DOLL -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. “Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet

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 DollSwap, 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 DOLL LP tokens representing 10 DOLL /Any BEP20 tokens and 10 BNB tokens.

• 1 DOLL LP token = 1 DOLL + 1 BNB

• Someone trades 10 DOLL for 10 BNB.

• Someone else trades 10 BNB for 10 DOLL .

• The DOLL/BNB liquidity pool now has 10.017 DOLL and 10.017 BNB.

• Each DOLL LP token is now worth 1.00017 PIZZA + 1.00017 BNB.

To make being a liquidity provider even more worth your while, you can also put your DOLL LP tokens to work whipping up some fresh yield on the DOLL farms (here), while still earning your 0.17% trading fee reward.

• We are taking DOLL an example