Skip to main content
Learn

What Is the Role of a Liquidity Provider in a Perpetual Futures DEX?

LPs act as the counterparty to all traders, using their collateral to back winning profits and absorbing losing traders' losses for fees and funding.
Greeks.Live23.11.25

What Is the Role of a Liquidity Provider in a Perpetual Futures DEX?

A liquidity provider (LP) in a perpetual futures DEX often acts as the counterparty to all traders. Instead of trading against other individual traders, traders trade against the LP pool.

The LP's collateral is used to back the profits of winning traders, and they absorb the losses of losing traders, earning fees and sometimes funding payments for taking this counterparty risk.

How Do Liquidity Providers (LPs) in a DEX Earn Fees?
How Does the Concept of “Staked Capital” Act as Collateral against Malicious Behavior?
In Options Trading, How Does the Role of a Market Maker Compare to a DEX Liquidity Provider?
How Can a Perpetual Futures DEX Be Valued Using Protocol Revenue?

About

Contact

Editorial Policy

Terms of Service

Privacy Policy

Cookie Policy

© 2025 Greeks.Live

All Rights Reserved

Greeks.Live RFQ

Build by Noo on Engine

Source: The content on this website is produced by Greeks.live's proprietary analysis systems, which utilize advanced Large Language Models (LLMs). This information might not be subject to a full human review before publication and may contain errors.
Responsibility: You should not make any financial decisions based solely on the content presented here. We strongly urge you to conduct your own rigorous due diligence and to consult a qualified, independent financial advisor.
Purpose: All information is intended for informational purposes only. It should not be construed as financial, investment, trading, or any other form of professional advice. News and data are not trading signals.
Risk: The cryptocurrency, derivatives, and options markets are highly volatile and carry significant risk. By using this site, you acknowledge these risks and agree that Greeks.live and its affiliates are not responsible for any financial losses you may incur.