Frequently asked questions about Liquidity Providing, Liquidity Mining and Liquidity Bootstrapping.
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.
Certain pools: Earn liquidity mining rewards (in KAR) from occasional Liquidity Programs. Go to the Liquidity Mining section below to learn more.
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.
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.
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.
You must provide liquidity as a pair. The only time you can provide single-sided liquidity is during the bootstrapping period.
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.
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.
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, they'll be eligible for a Loyalty Bonus paid in KAR. Users can also remove their LP tokens and still be eligible for the Loyalty Bonus as long as they don't claim their KAR rewards. You can learn more here.
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.
Yes. You can participate by connecting to the Karura network in the app and then navigating to the
Swapsection. You'll see a tab titled
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.
Sometimes. It depends on how the incentive program is structured.
No. You will have to wait until the trading pair is live to withdraw your liquidity.
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).