V2 Pair deposit

DragonSwap V2 liquidity pools are built upon the Uniswap V2 Automated Market Maker (AMM) model, offering a decentralized and efficient way for users to provide liquidity and earn from their investments.

V2 LP Deposit

LP Tokens

When you contribute assets like KLAY and USDT to a liquidity pool on DragonSwap, you receive LP tokens specific to that pool, for example, KLAY-USDT LP tokens. These tokens signify your share in the KLAY-USDT liquidity pool, and you're free to redeem your contribution at any point by withdrawing your liquidity.

Earning Trading Fees

Trading on DragonSwap involves a small fee for the convenience and liquidity provided. Specifically, each transaction in the Exchange V2 liquidity pools incurs a 0.3% trading fee. Out of this, 0.24% is redistributed back into the pool, rewarding liquidity providers with a portion of the trading fees, effectively sharing the revenue generated from the platform's trading activity.

Understanding Impermanent Loss

While providing liquidity can be lucrative, it's important to acknowledge the risks, such as exposure to impermanent loss. This phenomenon occurs when the price ratio of your deposited assets changes compared to when you deposited them, potentially resulting in a temporary loss when compared to simply holding the assets. It's a vital consideration for anyone looking to become a liquidity provider on DragonSwap or any AMM platform.