- What is liquidity mining?
Each trading pair market that supports automatic market making will be configured with a corresponding liquidity pool (Liquidity Pool). Users inject funds into the liquidity pool to automatically become a liquidity provider (Liquidity Provider), indirectly become a market maker, and get the transaction fee dividend, which is the so-called liquidity mining.
- What is an Automated Market Maker (AMM)?
The automatic market-making robot will determine the swap price according to the ratio of the two tokens in the pool, and the trader will directly trade at the price determined by the system when placing an order. Using algorithmic robots to simulate trading behavior in the market and providing liquidity to the market is AMM automatic market making. ZT's AMM automatic market making calculates the bid and ask prices according to the "Constant Product Market Maker Model" (x*y=k), thereby providing continuous quotes for the market.
- What is a liquidity mining fund pool?
Each market that supports automatic market making has a corresponding fund pool, and the automatic market making fund pool will provide market making funds for AMM automatic market making. Users can become market makers by providing liquidity for the fund pool, and thus receive the handling fee dividends obtained by the automatic market-making exchange of the fund pool according to the proportion of the fund pool. When adding liquidity, it is necessary to add assets in two currencies at the same time according to the proportion. When redeeming, the liquid assets will be converted into two currencies in proportion and returned at the same time.
- What does liquidity mining mean to providers and participants?
For liquidity providers, participating in liquidity mining means being able to use their idle assets to obtain returns with very low risks; for transaction participants, the waiting time for transactions is greatly shortened, while liquidity mining the larger the size of the mining pool, the less slippage will be generated in transactions.
- Are there any requirements to redeem liquidity?
If the same trading pair is successfully added, redemption will take place after 24 hours.
- Where do the profits from liquidity mining come from?
The platform will pay the corresponding remuneration to provide income for liquidity providers. The decentralized trading platform will pay the transaction fee to the liquidity provider, and the mortgage lending platform will pay the loan interest to the liquidity provider. In ZT participating in liquidity mining, users will receive additional rewards from the platform in addition to the corresponding transaction fee income.
- What are the risks for me to provide liquidity?
Impermanent losses are required, which are the most common losses in liquidity mining and are usually unavoidable. Generally speaking, the revenue share provided by the platform side to the liquidity provider usually greatly exceeds the impermanent loss. In addition, DeFi liquidity mining also needs to bear the security risks of DeFi projects, and users who participate in liquidity mining in ZT do not need to worry about security issues.
- What is impermanent loss?
Impermanent loss refers to the loss of funds caused by the price difference caused by the price change of the digital asset after the investor deposits the digital asset into the automated market maker liquidity pool. No matter what direction the price of digital assets moves, impermanent losses will occur, and the greater the deviation, the greater the impermanent losses.