Liquidity Pools


In Elektrik Dex V1, liquidity is handled through unique, non-fungible positions, ensuring that participants continue to earn a portion of the transaction fees for contributing to liquidity pools. Upon adding your tokens to a Liquidity Pool, you will be issued specialized Liquidity Provider NFT tokens, representing your stake and earning you a share of the trading fees.

Non-fungible liquidity positions

In Elektrik Dex V1, liquidity providers are granted unprecedented control over the price range in which they wish to allocate their liquidity. By adding your tokens to a Liquidity Pool, you establish a unique non-fungible liquidity position, each with its specific settings.

In this context, Elektrik Dex V1 innovatively treats liquidity positions as NFTs. These NFTs, while transferable, serve as a testament to the ownership of the underlying assets and any accumulated trading fees.

It's important to note a distinct feature of Elektrik Dex V1: trading fees are not automatically reinvested into the position. Instead, you have the autonomy to claim them on an individual basis through each specific position detail page.

The platform remains committed to providing flexibility for its users; you are free to recover your funds at your discretion by simply choosing to remove your liquidity from the pool.

For instance, if you were to deposit ETH and DAI into a Liquidity Pool, you'd receive ETH-DAI LP tokens in return. The quantity of LP tokens you acquire corresponds to your share in the ETH-DAI Liquidity Pool. Additionally, you have the flexibility to retrieve your funds whenever you prefer by opting to withdraw your liquidity.

Impermanent Loss

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

“Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman

Last updated