Frequently asked questions about Liquidity Providing, Liquidity Mining and Liquidity Bootstrapping.
Liquidity Providing (LPing)
What do I get for being a liquidity provider (LP)?
All LPs: Earn your proportion of the trading fees for the trading pair that you provide liquidity to. Every trade is subject to a 0.30% fee.
kUSD pools: Earn a portion of the stablecoin surplus in kUSD as the Karura Swap is utilized as a complimentary liquidation mechanism to keep stablecoin stable. The reward rate DexSavingRewardRate is determined per pool. To earn this reward, LPs must stake their LP tokens.
Certain pools: Earn liquidity mining rewards (in KAR) from occasional Liquidity Programs. Go to the Liquidity Mining section below to learn more.
What tokens are the trading fees that I earn paid in?
Your trading fees will be paid in the same two coins that you provide liquidity to. The ratio of these tokens reflects the ratio in the pool.
Why can't I see the trading fees I'm earning?
The trading fees you earn are added back to the liquidity you are providing. You'll receive your fees once you redeem your LP tokens.
🚨What are the risks with adding to an LP pool?
There are various risks of being a liquidity provider especially when there are significant fluctuations in the underlying asset exchange rates, which may result in LPs being worse off than simply holding the tokens. You can read more about LP risks here.
Why can’t I provide liquidity?
You must provide liquidity as a pair. The only time you can provide single-sided liquidity is during the bootstrapping period.
Is there a dashboard where I can see trading volumes?
Not at the moment. However, for the builders out there, the information is publicly available on the blockchain😎.
Why did I receive a different amount and balance of tokens than when I put in?
The tokens that you receive after withdrawing your liquidity from the LP pool reflect the ratio of the tokens in the pool when you withdraw, not when you contributed. You can read more about LP pools work here.
Is there a liquidity mining program?
Liquidity mining will be used to incentivize certain trading pairs. You can learn more about how liquidity mining program works here.
What does it mean to stake my LP tokens?
When you stake your LP tokens, you are locking them on the Karura platform. Users stake their LP tokens to earn liquidity mining rewards. Users can unstake their LP tokens at any time.
Do I have to stake my LP tokens to earn liquidity mining rewards?
What happens if I don’t stake my LP tokens?
If you don’t stake your LP tokens, you will only be earning your proportion of the trading fees for the pair you provide liquidity to. You will not earn any Liquidity Mining rewards.
How does claiming my KAR rewards work?
KAR rewards are accumulated over time and LPs can claim these rewards at any time. However, if LPs keep the rewards in the pool until the end of the program, a minimum of X% of Loyalty Bonus will be awarded to LPs. You can learn more here.
Can I participate in bootstrapping?
You can participate in bootstrapping during the bootstrap period. The bootstrap period is the process by which new token pairs launch on the Swap. If a token pair exists on the Swap, that means the bootstrap period has ended for that trading pair. You can learn more here.
Can I participate in bootstrapping in Polkawallet?
Yes. You can participate by connecting to the Karura network in the app and then navigating to the Swap section. You'll see a tab titled Bootstrap.
Can I provide liquidity after the liquidity targets are met?
Can I provide liquidity after the bootstrapping period ends?
Yes. Once the token pair launches for trading, you can provide liquidity. However, you will not be able to provide single-sided liquidity. You must provide liquidity in token pairs.
Are there additional incentives for users that participate in bootstrapping?
No. However, users that participate in bootstrapping are the pioneers that enable a new trading pair for the entire protocol, so you have that going for you, which is nice.
Can I withdraw my liquidity during the bootstrapping period?
No. You will have to wait until the trading pair is live to withdraw your liquidity.
Can I provide liquidity multiple times throughout the bootstrap period?
What happens if I provide only one token as liquidity during the bootstrapping period?
If you are contributing to only one side of the pool (say Token A), you are effectively converting 50% of Token A into Token B based on the exchange rate when the Bootstrap ends (and the pool opens for trading).