How Do Liquidity Providers Earn Fees in an AMM Model? ▴ Learn

How Do Liquidity Providers Earn Fees in an AMM Model?

Liquidity providers (LPs) earn a share of the trading fees generated by users who swap tokens through the pool. Every trade incurs a small fee, typically a percentage of the transaction value.

These collected fees are automatically added back into the pool, increasing the total value of the pool. The LPs' share of the pool's assets, and thus the accumulated fees, is proportional to their contribution to the total liquidity.

How Do Liquidity Providers (LPs) in a DEX Earn Fees?

What Is the Role of a Mining pool’S’share’ in the Block Reward Distribution?

What Is the Primary Source of Revenue for a CEX Market Maker versus an AMM LP?

What Is the Difference between Pay-Per-Share (PPS) and Proportional (PROP) Mining Pool Payment Methods?