Liquidity Provider

Liquidity Providers earn rewards in exchange for supplying their assets to the network. Their assets are added to pools which Swappers use to exchange assets.

Get Started

The network is not live yet. In the meantime, Liquidity Providers can buy Rune and stake it to earn rewards.

  1. Buy Rune
  2. How to Stake Rune
Benefits

The main benefit for Liquidity Providers is that they're able to earn yields on stagnant assets like Bitcoin, Binance Coin etc. This hasn't been possible before. Check out Providing Liquidity for more.

Rewards

Liquidity Providers are rewarded for keeping their assets in THORChain.

System Income comes from Block Rewards and the Swap Fee. It's then split and some rewards are given to Liquidity Providers.

Rewards for Liquidity Providers are affected by the Emission Schedule and Balancer.

Liquidity Providers get their rewards when they take their assets back out of THORChain.

Responsibilities

Liquidity Providers lend their assets to the network. They can lend the native asset, Rune, or external assets like Bitcoin and Ether.

Requirements

Liquidity Providers must have assets to deposit in the network. These could be the native asset, Rune, or external assets like Binance Coin, Bitcoin, Ether etc.

Costs

Liquidity Providers don't bear any real-world costs like Node Operators. In practice though there are 2 places where they can incur costs on the network—

  1. Impermanent Loss – if you withdraw your assets and the price is higher or lower than when you deposited them, you may suffer "Impermanent Loss". You can see this in effect in Providing Liquidity.
  2. Opportunity Cost – if you could earn more with your assets elsewhere, there is a cost to providing them as liquidity on THORChain. This is dependent on the context, but at time of writing there are few more promising options for passive yield on assets like Bitcoin than THORChain.
Penalties

The protocol doesn't penalize Liquidity Providers.

This Spotlight was commissioned by the THORChain team to help spread knowledge and develop the community. Members of the Rebase team had holdings of RUNE exceeding $100 in value throughout the project.

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