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Liquidity Pool Staking
Brief detail on how liquidity pool staking works.
Liquidity Pool Staking is the process by which you add your tokens to the exchange pool for other users to trade with and for doing this you earn a fee from each trade based on how many shares of the exchange pool you own. In simple words — you “stake” your tokens and earn fees for providing liquidity.
Liquidity pools are smart contracts that power DeFi (decentralised finance) marketplaces across much of the crypto ecosystem. On Unit Network as with other DEX's, these pools contain digital funds that facilitate users to buy and sell tokens.
On Unit Network, liquidity providers (LP Stakers) receive up to 0.5% in USDU of every trade for pools they have staked in.
Unit Network currently supports LP Staking of all token pairs.
2. Click Exchange
3. Click Stake
4. Add the amount you want to stake in USDU and an equivalent amount in the token you selected in 1 to 1 ratio.
For example, if you would like to stake 100 UNIT at the $1 price, you will have to add 439.23 USDU in addition to 100 UNIT to the pool. If you don't have enough USDU in your wallet, you can top up your balance here, using any of the Blue Chips.
5. Click Stake
6. Receive shares of the pool, so when exchange fees are made, you receive a % based on your shares of the pool.
0.5% of staking rewards are redistributed to the liquidity pool, and LPs receive rewards based on the shareholding % in the pool. In order to realise the rewards, LPs will have to unstake the tokens.
2. Click Exchange
3. Click Unstake
4. Enter the amount you would like to unstake
5. Click Confirm
6. Unstaked tokens will appear in your Wallet with realised reward
This is based on the concept of an AMM (Automated Market Maker), which allows tokens to be traded against a pool in which token holders have staked tokens. When people trade against this exchange pool, the exchange rate changes based on what people are buying/selling.
Each token created on Unit Network has its own liquidity pool, paired with USDU, the US dollar stablecoin of the Unit Network, as TOKEN-USDU. A person trading TOKEN for USDU or USDU for TOKEN trades with the pool, rather than directly one-on-one with another individual buyer or seller. Once the one token is added and the other is removed from the pool, minus the fee for trading, the ratio in the pool adjusts back to 50-50 value, and the price of one in terms of the other is changed. Similar to the functionality on https://uniswap.org/.
Last modified 2mo ago