🏖️Liquidity Pools

Liquidity pools allow you to provide liquidity by adding your tokens to liquidity pools.

When you add your token to a liquidity pool, you will receive Liquidity Pool (LP) tokens.

As an example, if you deposited BOOM and BUSD into a liquidity pool, you would receive BOOM-BUSD LP tokens.

The number of LP tokens you receive represents your portion of the BOOM-BUSD liquidity pool.

You can also redeem your funds at any time by removing your liquidity.

Providing liquidity is not without risk, as you may be exposed to impermanent loss.

It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. For example, whenever someone trades BoomSwap Finance, the trader pays a 0.17% fee, of which 0.1% is added to the liquidity pool of the swap pair they traded on.

For example:

• 10 LP tokens are representing 10 BOOM and 10 BUSD tokens.

• 1 LP token = 1 BOOM + 1 BUSD

• Someone trades 10 BOOM for 10 BUSD.

• Someone else trades 10 BUSD for 10 BOOM.

• The BUSD/BOOM liquidity pool now has 10.015 BOOM and 10.015 BUSD.

• Each LP token is now worth 1.00015 BOOM + 1.00015 BUSD.

To make being a liquidity provider even more worth your while, you can also put your LP tokens to work whipping up some fresh yield on the Yield Farms while still earning your 0.1% trading fee reward.