Understanding Liquidity Provision

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[1] | More Than Just Swaps

While using a DEX like STONfi to swap tokens is common, another vital function on the $TON blockchain involves supplying the liquidity that makes these trades possible. This role is fundamental to how the system operates.

[2] | How Pools Work

Users provide tokens of equal value to a liquidity pool. For every swap that happens in that pool, a small fee is taken, usually between 0.01% and 0.2%. This fee is then shared among all the liquidity providers, proportional to their share of the total value locked.

[3] | Earning Potential

This system can lead to significant annual returns for providers. The percentage from each trade might seem minor, but it can accumulate into substantial figures over time, with returns varying from single digits to much higher.

[4] | Enhanced Features on STONfi

The platform improves this process with tools like Arbitrary Provision. This allows you to enter a pool with just one token from the pair, as the smart contracts automatically handle the necessary swap for you.

[5] | Protecting Providers

A key innovation is the IL Offset, currently active for the STON/USDT pool. It offers full protection from impermanent loss for price movements up to 2x, safeguarding a portion of the pool's TVL. Automatic compensation is provided, applicable to all participants in the pool.

[6] | Additional Farming Rewards

STONfi also has Farming for specific pools. This provides set daily rewards on top of the base fees. To join, you select a pool with farming enabled and then lock your LP-tokens in a separate smart contract after you have provided liquidity.