Liquidity Provision

LP token is often less exposed to the index value compared to LONG and SHORT. Unlike other liquidity tokens, Derivable's LP is exposed to both Impermanent Loss and Gain as the index value is changed by market forces.

To compensate for counter-party risks, the LP earns interest rates, price spreads, opening fees, and premiums from both LONG and SHORT positions.

PreviousPrice Oracle NextLiquidity Concentration

Last updated 6 months ago

Was this helpful?

LP token is often less exposed to the index value compared to LONG and SHORT. Unlike other liquidity tokens, Derivable's LP is exposed to both Impermanent Loss and Gain as the index value is changed by market forces.

To compensate for counter-party risks, the LP earns interest rates, price spreads, opening fees, and premiums from both LONG and SHORT positions.