Introduction
In the context of Chainflip, liquidity provisioning is the process of supplying assets to the Chainflip protocol’s liquidity pools. By providing liquidity, you’re essentially playing the counterpart to the swaps that are executed on the Chainflip protocol.
Liquidity provisioning is a crucial aspect of the Chainflip protocol. It ensures that there are sufficient assets in the system for swaps to occur smoothly and efficiently
Liquidity Providers
Liquidity providers (LPs) are entities that supply assets to Chainflip’s liquidity pools. They then create orders that indicate their willingness to act as the counterpart for swaps at a specific price. In return for their contribution, LPs earn fees. The more liquidity an LP provides, the more fees they can potentially earn.
Quick start
To start using supplying liquidity on Chainflip, you can choose what liquidity provisioning strategy is best fit for your risk tolerance. You can either use passive liquidity or active liquidity strategies: