💎Liquidity Mining
Liquidity Mining
Mechanism of Liquidity Mining
In Astro Swap, liquidity mining involves users, known as liquidity providers (LPs), depositing assets into the exchange's liquidity pools. These pools are essential for enabling trading on the platform. In return for their contribution, LPs earn rewards, generally in the form of Astro Swap's native tokens.
Use of CLMM Model
Astro Swap's adoption of the Concentrated Liquidity Market Maker (CLMM) mode allows for more efficient capital usage. LPs can provide liquidity within specified price ranges, optimizing their potential returns by concentrating liquidity where it is most likely to be utilized.
Reward Distribution
The rewards for liquidity mining are distributed in a manner proportional to each LP's contribution to the pool. This system incentivizes the provision of liquidity, as greater contributions lead to higher rewards.
Liquidity Pools Variety
Astro Swap offers various liquidity pools, corresponding to different asset pairs. This diversity allows LPs to choose pools that align with their investment strategy and risk tolerance.
Dynamic Fee Structure
The CLMM model enables Astro Swap to implement a dynamic fee structure. This approach allows the platform to adjust transaction fees based on current market conditions, potentially increasing rewards for LPs during periods of high demand or volatility.
Risks and Considerations
While liquidity mining can be lucrative, it carries risks such as impermanent loss, particularly in volatile markets. Astro Swap's platform likely includes tools and information to help LPs understand and mitigate these risks.
Fee-based Liquidity Mining
In Astro Swap, liquidity mining rewards are distributed uniquely, based on the actual fee performance of each position, rather than the amount of liquidity provided. This system rewards positions that are actively used in transactions within their active price ranges, reflecting their true contribution to the protocol.
The mining rewards are linearly released. Each new transaction triggers the contract to calculate the proportion of fees generated by each position relative to the total pool fees since the last calculation. Rewards are then distributed proportionally, based on each position's contribution to these generated fees.
This fee-based mining approach ensures that rewards are not diluted by inactive liquidity providers or those who place liquidity in non-optimal price ranges merely to claim mining incentives. It promotes a more cost-effective strategy for both the protocol and third-party project owners in motivating liquidity provision. Consequently, the Total Value Locked (TVL) in Astro Swap tends to be more efficiently utilized compared to other DEXes.
Easy to create your new pool.
How to create a Liquidity Pool to Mining ?
Fill the information of your new pool
Select pair (Ex: ETH-USDT)
Choose fee tier (0.01%, 0.05%, 0.3% and 1%)
Set price range (Low price / High price)
Write down number of Deposit amount you want
The result
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