Liquidity Pool

BeanSwap pools allow you to provide liquidity by adding your tokens to liquidity pools.

When you add your token to a liquidity pool you will receive Liquidity Pool (LP) tokens.

As an example, if you deposited BEANSTALK and BNB into a liquidity pool, you would receive BEANSTALK-BNB LP tokens.

The number of LP tokens you receive represents your portion of the BEANSTALK-BNB liquidity pool.

You can also redeem your funds at any time by removing your liquidity

Providing liquidity is not without risk, as you may be exposed to impermanent loss. “Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman

It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. Whenever someone trades BeanSwap, the trader pays a 0.2% fee, of which 0.17% is added to the liquidity pool of the swap pair they traded on.

For example:

• There are 10 LP tokens representing 10 BEANSTALK and 10 BNB tokens.

• 1 LP token = 1 BEANSTALK + 1 BNB

• Someone trades 10 BEANSTALK for 10 BNB.

• Someone else trades 10 BNB for 10 BEANSTALK.

• The BEANSTALK/BNB liquidity pool now has 10.017 BEANSTALK and 10.017 BNB.

• Each LP token is now worth 1.00017 BEANSTALK + 1.00017 BNB.

To make being a liquidity provider even more worth your while, you can also put your LP tokens to work whipping up some fresh yield on the BEANSTALK farms (here), while still earning your 0.17% trading fee reward.