πΈLP Farming
Provide liquidity, earn on trading fees & maximize your APR with LP farming
What are Liquidity Pools?
When you add your tokens to a Liquidity Pool you will receive Liquidity Provider (LP) token and receive a share of the fees in the particular trading pair.
Your tokens there are used by a CEX or DEX to make the operations faster and cheaper. Works exactly like a bank deposit - Exchange pays you for holding your funds.
Calculating LP Token Rewards
On PancakeSwap the trader pays a 0.25% fee for each swap, of which 0.17% is added to the Liquidity Pool of the swap pair.
For example:
There are 100 LP tokens representing 100 LTT and 100 BUSD tokens
1 LP token = 1 LTT + 1 BUSD
Someone trades 100 LTT for 100 BUSD
then another person trades 100 BUSD for 100 LTT
The LTT/BUSD liquidity pool now has 100.17 LTT and 100.17 BUSD
Each LP token is now worth 1,0017 LTT and 1,0017 BUSD
To make liquidity providing even more profitable β we made farming pools, where you can stake your LP tokens and receive additional rewards!
What is LP Token?
Liquidity provider tokens or LP tokens. You receive them once you put your tokens into a Liquidity Pool. When you lock your liquidity in pools β you receive a part of the transaction fees in the specific trading pair.
LP tokens are used to track how big is contribution to the pool of each liquidity provider. The number of LP tokens shows the share in the Liquidity pool, which will determine your income over time. Also, the LP tokens are used to determine how much liquidity (tokens) is returned to providers.
Holding LP tokens gives full control over the funds locked in the liquidity pool. You can trade your LP tokens on DEXes, you can sell them or stake them to receive additional interest in βfarmingβ pools.
Get started with Liquidity Provision (LP)Release Details:
LP pool opens: 11 April 15:00 UTC
LP pool closes: 11 July 15:00 UTC
Number of LTT in LP pool: 60000 LTT
There are no locks and vesting for LP tokens and LP Farming Rewards on LocalTrade
LP Farming
LP Farms are very close to the regular staking vaults, but you use LP tokens to receive rewards.
From the start, you will have available LP LTT/BUSD pool. Each pool will accept only its own exact tokens. For example, LTT-BUSD farm will accept only LTT-BUSD LP tokens.
Once you have the LP tokens β go straight to the farms and earn some free tokens. You deserve it!
Disclaimer: You may lose your funds because of impermanent loss. Once the trading pair tokens price changes it will influence your LP token price. Consider that LP Farming and Liquidity Pools are the instruments meant to be used by advanced users. There are risks related to those instruments.
You can read more about impermanent loss in this article
Calculalting LP Farming Rewards
Calculation includes two things:
LP rewards APR earned through providing liquidity and;
Farm base rewards APR earned staking LP Tokens in the Farm.
Farm Base rewards APR is calculated according to farm base rewards pool and the total liquidity in the farm. More liquidity β less APR
Calculating LP Reward APR on PancakeSwap
In addition to that, you receive LP rewards for providing liquidity. Here's an example of calculating LP rewards:
In the LTT/BUSD for example we will see such values:
Liquidity: $296.62Π Volume 24H: $79.40Π Volume 7D: $695.52Π
Calculate yearly fees:
Use the 24H volume to calculate the how much youβll receive from fees (based on the 0.17% trading fee structure): $79,400*0.17/100 = $134,98
Next, use that fee share to estimate the projected yearly fees earned by the pool (based on the current 24h volume): $134,98*365 = $49256
We can now use the yearly fees to calculate the LP rewards APR:
That's yearly fees divided by liquidity:
(49,256/$296,620)*100 = 16.63% LP reward APR
How to stake LP tokens at Farming VaultsLast updated