What Is the Role of the Liquidity Provider (LP) in a DEX's Revenue Model? ▴ Learn

What Is the Role of the Liquidity Provider (LP) in a DEX’s Revenue Model?

Liquidity providers (LPs) are essential to a DEX, as they deposit token pairs into pools, enabling trades. In return, LPs earn a share of the transaction fees generated from the trades that occur in their pool.

This fee share is their primary form of revenue. The protocol's revenue model often involves taking a small cut of these fees before they are distributed to the LPs.

How Does an Oracle Service Provider Earn Revenue?

How Does ‘Yield Farming’ Relate to the Concept of a Liquidity Pool?

What Is the Main Risk for a Liquidity Provider Whose Position Is Entirely “Out of Range” in a Concentrated Pool?

How Does a DEX Generate Revenue beyond Transaction Fees?