Liquidity Provision Tokens

Overview

Liquidity provision is a popular way to earn passive income in the XOX Labs DeFi ecosystem. When you add your XOX tokens to a liquidity pool, you become a liquidity provider (LP) and receive LP tokens that represent your share in the pool. As a liquidity provider, you earn a portion of the transaction fees generated by the pool.

Please refer to Make Your Tokens Work For You if you would like to become a liquidity provider on XOX DEX V1 and earn a portion of the trading fees by holding LP tokens.

Additional rewards with XOX Yield Farms

By acquiring specific LP tokens, liquidity providers can also be eligible for yield farming rewards. Refer to Yield Farming for further details on the yield farming mechanism and distribution.

Liquidity Provision Tokens

When you add your XOX tokens to a liquidity pool, you are contributing to the pool's liquidity. In return, you receive LP tokens that represent your share in the pool. The number of LP tokens you receive is proportional to the amount of liquidity you provide.

For example, if you deposit 100 XOX tokens and 1 WBNB into the XOX-WBNB liquidity pool, and the total liquidity in the pool is 1,000 XOX tokens and 10 BNB, you will receive 10% of the LP tokens, representing your 10% share in the pool.

As a liquidity provider, you earn a portion of the transaction fees generated by the pool. These fees are paid by traders who use the pool to swap between XOX and WBNB. The fees are distributed to liquidity providers in proportion to their share in the pool.

Consequently, a liquidity provider's funds can be claimed at anytime by removing the LP tokens from the pool. By withdrawing LP tokens, liquidity providers are effectively destroying the LP tokens in exchange for a portion of the pool's funds.