The Cross-Chain Bridge usesLiquidity Pools to provide bridging services. All Liquidity Pools are designed as single-asset Liquidity Pools so that liquidity providers are never exposed to the well-known risk termed Impermanent Loss commonly associated with DEXs.
Liquidity can be provided on the Manage Liquidity page by anyone and any token (as long as the limit of the pool is not yet reached, see below). Depositing liquidity from an unlisted token on the Cross-Chain Bridge does not automatically grant bridging permission. To understand how listings & the permissionless listing features work please seePermissionless Listing.
IMPORTANT: The Cross-Chain Bridge may not be able to support tokens with a tax function for bridging. Please fill out this form to speak to a representative.
Here's an overview of how Liquidity Pools work:
A liquidity provider (LP) deposits their desired amount of a token into the Manage Liquidity page of the Cross-Chain Bridge. As a "receipt", the liquidity provider receives an LPToken of which there are two functions.
1) to withdraw liquidity at a later date
2) to earn passive rewards via the liquidity pools, there are two earn options:
Earn Option 1: Liquidity Mining
Earn Option 2: BRIDGE Farm - Only available for USDT
To avoid excessive withdrawal activity, there is a small 0.2% fee when LP tokens are withdrawn from the Manage Liquidity page.
Important: LP Tokens do not earn rewards automatically, they have to be deposited in either a Liquidity Mining Pool or a Farm (if available).
Important: If a bridging transaction drains the remaining tokens in one of the Liquidity Pools your initial liquidity is still available. In this case, the liquidity taken out by the bridging user was paid in on one of the other networks and is available there for withdrawal. If a withdrawal issue arises, please contact Support to have your liquidity manually withdrawn.
For cross-chain transactions, the bridge utilizes the liquidity from the LPs. The bridging users pay a small bridging fee which creates a protocol incentive: Being a community-oriented project, the Smart Contracts circulatethe major part of the accumulated protocol incentive or bridging fees back to its liquidity providers and BRIDGE token owners from the corresponding token that has been bridged - the protocol incentive is distributed to the following pools:
70% of the fee is sent to the corresponding bridged token in the Reward Pool.
15% of the fee is sent to the corresponding bridged token in the Liquidity Miningpool.
More technical details can be found in the Smart Contracts section of this GitBook.