How It Works: Liquidity Pools in DEXnow.io

In our previous posts, we've already discussed how fees are calculated on DEXnow.io, how to interact with the Price Chart for effective trading, and how DEXnow.io blends Automated Market Makers with traditional Order Books. Today, we want to delve into how you can acquire and sell shares in these liquidity pools and the additional benefits Liquidity Providers receive for their clients' transactions on our platform.

To get started with liquidity pools, you'll need to navigate to the relevant section (Trade -> Liquidity Provision).

DEXnow.io blog – LP – how it works

Here, you'll find information about the available liquidity pools for each instrument.

Let's break down the information provided here:

1. Ticker – instrument's name

2. Pool Size – size of the pool in the currency of the instrument, in our case, it's USDC

3. Token Value – indicates the cost of a single share in the liquidity pool, measured in the currency of the instrument

4. Total Tokens – total number of shares in the pool

5. Client Tokens – number of shares you own

To purchase or sell shares, you need to click on the arrow icon next to the instrument you're interested in.

Afterward, you'll be directed to a window where you can create an order to buy or sell shares in the selected pool.

Here, you can only edit the number of shares in the Tokens field. The lower fields will indicate how much SOL and USDC are required to complete the transaction. After the transaction is completed, your new shares will be displayed in the Client Tokens field. And remember, you can always sell your shares at any time, following the same process.

We'd like to highlight that participants in the pools receive additional income. Specifically, 50% of the commission fees charged by the DEXnow.io platform for transactions are allocated to the corresponding pool, thereby increasing the value of the shares. This is one of the advantages of participating in our liquidity pools.