Liquidity Provider

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.

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.

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

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.

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.

The protocol doesn’t penalize Liquidity Providers.