How do liquidity pool fees work?

Asked 2 years ago

Hi, I've joined DEX and facilitated my first peer-to-contract trade. But I just realized that I missed a crucial part of my calculation, and those are the fees! I feel like such a fart. What protocol fees can I expect from a liquidity pool? Do the fees get split amongst the liquidity providers (which makes the most sense)?

Jeramiah Evans

Wednesday, August 24, 2022

The fee you'll get depends on the percentage of your deposit in relation to the pool. In simpler words, if the pool has $900, and you deposited $100 (bringing it up to $1,000), you'll earn 10% of the fees. Every time someone uses the pool for swaps, you'll get a small percentage as a reward, since you're a liquidity provider to the pool. So, liquidity pools' fees are split appropriately based on the liquidity provider's contribution.

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