🟡Liquidity Pools

A liquidity pool refers to a collection of tokens that are securely locked within a smart contract, serving the purpose of facilitating asset trading on a decentralized exchange (DEX).

In contrast to traditional finance practices, where liquidity is managed through a central limit order book where buyers and sellers create orders based on price and demand, the HyperBlast Protocol adopts a distinctive approach.

Liquidity providers (LPs) contribute these pooled tokens and, in return, receive an LP token as compensation for supplying liquidity.

It employs an Automatic Market Maker (AMM) to replace the conventional order book system, relying instead on a liquidity pool containing two assets, with the price being determined by the AMM.

As it was mentioned earlier on economy section liquidity providers will receive ~4% of APR on USDB and WETH pools, thanks to the blast yield feature, in addition to the 0.3% from trading fee.

Take a look at blast docks to understand how this works: https://docs.blast.io/building/guides/eth-yield It is a rebasing system applied to contracts and wallets.

Take this into account before doing an investment on liquidity pools:

  • If you invest on PEPE/WETH you have to split your investment between PEPE + WETH to provide liquidity, only WETH form both tokens are rebasing so your APR is 2% instead of 4%.

  • In the opposite if you invest on USDB + WETH pool both tokens are rebasing so you get the ~4% APR.

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