How Pools Work

Providing liquidity is how you earn passive income on Filament. Deposit a pair of tokens into a pool and you collect a share of every swap fee that pool generates — for as long as your funds stay in it. Think of it like staking, except you're the one powering the market.

What you're doing

Every trading pair on Filament (say LCAI / USDT) has a pool holding both tokens. When someone swaps, they pay a 0.30% fee, and that fee is added to the pool. As a liquidity provider (LP), you own a share of the pool proportional to what you deposited — so you earn that same share of every fee. The more the pair trades, the more you earn.

How to add liquidity

Go to Pools → Add V2 Liquidity.
Pick both tokens. Enter an amount for one — the other fills in automatically at the current pool ratio.
Confirm two transactions: an approval, then the deposit.
You receive LP tokens — your receipt and proof of ownership. Hold them to keep earning.

What you earn

Fees accrue directly into the pool, which means your LP tokens are continuously becoming redeemable for slightly more than you put in. You don't claim rewards separately — when you remove your liquidity, you get your share of the pool including all the fees it earned while you were in.

The risk: impermanent loss

This is the part to understand before you deposit. If the price ratio between your two tokens changes a lot while you're providing liquidity, you can end up with less dollar value than if you'd simply held the two tokens in your wallet. This gap is called impermanent loss.

It's "impermanent" because it only becomes real when you withdraw — if the price ratio returns to where you started, the loss disappears. The fees you earn can offset it, and on stable or low-volatility pairs it's minimal. But on a volatile pair, a big price move can outweigh the fees. Provide liquidity to pairs you understand, and don't assume LP-ing is risk-free just because it earns yield.

Removing liquidity

Go to Pools → Your V2 Liquidity, select the pool, and choose how much to withdraw. You get back your share of both tokens plus the fees earned. You can leave anytime — there's no lock-up.

Liquidity provision earns real yield, but it isn't free money. Understand impermanent loss, start with pairs you know, and only provide what you can afford to have exposed. See the full risk disclaimer.