Liquidity Pools

Liquidity Pools are smart contracts that store pairs of assets used on AMMs (Automated Market Makers). On Xenwave, Liquidity Pools are used by Xenwave Convert to both provide liquidity and determine the price of assets traded on the platform.

Anyone can become a liquidity provider by depositing their assets into the available liquidity pools; however, we do not recommend it for most users due to the extreme volatility and high levels of risk involved in managing liquidity pools.

Liquidity providers earn a 0.3% fee on every trade processed by Xenwave Convert, proportional to their share of the liquidity pool.

In most cases, Liquidity Pool share values for stablecoin pairs are inversely correlated with the market. This means that, with a few exceptions, their value tends to depreciate or remain stable when markets are on the rise and appreciate when markets are depressed.