The Role of Liquidity Providers (LPs)
One of the key components of Uniswap’s success is the uniswap provider (LP) model. Anyone can become an LP by providing an equal value of two tokens to a liquidity pool. For example, if an LP wants to provide liquidity for an ETH/USDT pool, they would need to deposit both ETH and USDT in equal value. In return for providing liquidity, LPs earn a share of the trading fees generated by the platform. These fees are distributed based on the proportion of liquidity an LP has contributed to the pool.…
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