This page will give you a brief introduction on how to manage liquidity pools. Let's dive in!

What is a liquidity pool?

Check this article made by Binance

Some FAQs

High level principles

  • A pool is made of 2 pairs, most of the pools on the Zero Exchange are paired with ZERO
    Example: ZERO/AVAX, ZERO/zETH, ZERO/zSUSHI

  • You enter a pool by providing paired tokens: ZERO and another token. A pool emits a certain number of ZERO tokens per week between a start and end date: These are the rewards to be shared amongst all liquidity providers of that pool in function of their shares of the pool.

  • The benefit of being in a pool (for a pool delivering rewards in ZERO and in the context of the Zero Exchange):

    • Earning rewards in ZERO by farming
    • Earning rewards in ZERO as a percentage of the trades
    • The rewards earned depends on your share of the pool
      If you are very early in a pool, you could put a small amount and still have huge rewards until more and more people join, then your pool share goes down, and so does your share of the rewards

  • Pools are available on the 3 chains

  • A pool has a starting and end date : You can stay in the pool after the end date is passed, but you won't earn rewards anymore from the farming, you will still collect rewards from the trading fees.

  • When to get out of a liquidity pools? Up to you ...

    • The longer you stay, the more rewards you earn (depends on your share of the pool of course)
    • See the risk of impermanent loss: Depending on the price action of one the paired token you may chose to exist and re-enter later to optimise your initial stack of ZERO
    • The liquidity pool has ended: Before exiting, please check again the risk of impermanent loss, you may want to time/delay your exit in some circumstances.

  • Risk: See impermanent loss

What are the fees?

  • Entering/exiting a liquidity pool involves several steps, same for claiming the rewards: There are transaction fees for each step
  • So from cheapest to most expensive to manage liquidity on the 3 chains: Polygon > BSC > Avalanche > Ethereum

Do we avoid the Ethereum chain then? Not necessarily: Depends where your tokens are (if you need to pay for the bridge costs or not), how much dollar value they represent and/or the share of the pool you would have, it could be worth it.

How do I find the pools where I'm providing liquidity?

  1. Go to the "Pools" section
  2. For current ("Live") pools you are in: Activate the checkbox "Staked only" and toggle on "Live"
  3. Toggle to "Finished" in case you are still in pools which have ended. At the time of writing: The "Staked only" checkbox only works with live pools
  4. Switch chain to check the pools on each chain
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