Liquidity Pools

PYESwap users can earn more with their PYE by staking equal amounts of tokens, known as a token pair, to the liquidity pools.

Liquidity Pools

Liquidity pools are formed by pairing two or more crypto tokens and depositing them into a smart contract. PYESwap presently employs the constant product formula for our automated market maker (AMM) and liquidity pools, which ensures that assets are always deposited in an equal 50/50 split depending on their current worth and that all liquidity pools only ever have two tokens in them.

Because liquidity pools allow you to exchange (trade) between the two tokens, these pools are often referred to as "trading pairs." On our information page, you can review the various liquidity pools and liquidity depths for all trading pairs. You can only swap tokens on PYESwap if there is enough liquidity for those tokens. If nobody has added liquidity for the tokens or tokens you want to swap, it will be difficult to do so.

Providing Liquidity

Providing liquidity will supply you with LP Tokens, which allow you to earn rewards in the form of trading fees for making sure there's always liquidity for the exchange to use.

A user can choose to provide liquidity to an existing pool (or create a new one) for a pair of tokens. Each pool has two tokens in it; held in quantities that represent an equal value of each token.

When a user provides liquidity, the exchange will give them an LP token in exchange for the tokens entered into the pool. This LP token represents the user's share of the pool’s value and can be exchanged later for a share of the tokens held in that pool at the time liquidity is withdrawn. Users earn fees for providing liquidity, which is added to the value of the LP token automatically and will be released to the liquidity provider on withdrawal.

Liquidity Provider (LP) Token

For instance, if you deposit PYES and USDC into a Liquidity Pool, you'll receive PYES-USDC LP Tokens. Your portion of the PYES-USDC Liquidity Pool is represented by the number of LP Tokens you receive.

When PYESwap users utilize your liquidity pool, Liquidity Providers are rewarded through trading fees. When trading on PYESwap, traders pay a 0.3% fee:

0.17% - Added to Liquidity Pool

0.06% - BuyBack & Burn of $PYES

0.05% - $PYES Staking Pool Donation

0.02% - Development

You can withdraw your liquidity at any moment to redeem your funds.

NOTE: While providing liquidity in a smart contract your tokens will no longer appear in your wallet, but will be visible by connecting your wallet to the DEX.

If available, the user may be able to farm their liquidity tokens in Farms, to earn additional rewards. While providing liquidity tokens are exposed to a risk known as impermanent loss or divergent loss.