How LPs Earn
Revenue Streams
1. Trading Fees (50% of total) Every time a trader opens or closes a position in a specific market, they pay a fee. 50% of this fee goes directly into that market's Liquidity Pool, increasing the value of LP tokens for that pool.
2. Liquidation Fees (63% of liquidations) When a trader is liquidated, a penalty is charged on the position size. 63% of this fee flows electronically to the specific Liquidity Pool backing that trade to cover potential risks, while the remaining 37% goes to the protocol/treasury.
3. Net Positive Outcomes (Trader Losses) The Liquidity Pool acts as the house for its specific market. When a trader loses money (PnL < 0), that money stays in the pool. Since retail traders statistically lose more often than they win (especially with high leverage), the pool tends to grow over time.
APY (Annual Percentage Yield) Estimation
$10M
$50M
~45%
$50M
$200M
~30%
$100M
$400M
~27%
$500M
$1B
~22%
Note: APY fluctuates based on volume, trader PnL, and fee generation.
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