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 ORL and OSDC into a liquidity pool, you would receive ORL-OSDC LP tokens.
The number of LP tokens you receive represents your portion of the ORL-OSDC 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 Ghost 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.
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.