If this is your first time, we'll run you through some simple training so that you hrasp the intricacies.
Have you ever exchanged money when travelling? Liquidity Providers are the ones who would give money to the exchange office for travellers to convert in-and-outof. They earn fees for providing that service.
Before we teach you more advanced concepts, you should understand that you always need to provide 50% ASSET / 50% RUNE in liquidity in pools.
Basically, you either get your 50/50 aplit beforehand, or you let the system sell some of your asset to get you the necessary RUNE to join the liquidity pool.
THORChain currently supports BNB chain assets, but they're soon adding BTC, ETH, ATOM, DOT, XMR. Remember, you'll need equal value of RUNE as the asset you pick to use for providing liquidity to buy RUNE, the system can sell half of your selected asset to enter you into the pool with 50% asset / 50% RUNE split required.
Not one of the above? Select or type the asset in the field. The data will be useful to gauge next priorities.
An indirect cost to Liquidity Providers comes in the form of impermanent loss (IL). It leads to potential loss of liquidity provider purchasing power as a result of price slippage in pools. Hoever, this is minimised by THORChain's slip-based fee. On the long term Liquidity Providers should always win however thay may experience some IL as assets diverge from one another. It shouldn't stop one from participating as a liquidity provider because in exchanfe thaey're rewarded in fees. Some call it HODL 2.0 because thay get to stack fees while providing a service with their unproductive assets. Play with the yellow silders to see IL as pooled assets change in vaule and diverge.
The ETH pool has on average had 40% fees earned which means
that it still yields a 34.4% APY after IL (40% - 5.6% = 34.4%).
Take the time to reflect on which pool you'd pick, and more importantly, why? You may also simulate yields if you would've had joined the selected pool on the selected date. Click on the asset to expand the view.