Liquidity Provision Guide
IFICHI Liquidity Provision Guide
Providing Liquidity on IFICHI
To enhance the IFICHI ecosystem's liquidity, users can contribute to liquidity pools via the platform's interface. Here’s a step-by-step guide to adding liquidity:
Access the Liquidity Pool: Navigate to the "Pool" section within the IFICHI Interface and select your preferred market for liquidity provision.
Determine Liquidity Amount: Decide on the amount you wish to contribute to the pool.
Choose Pooling Strategy: Opt for either "Buy & pool" for smaller amounts or "Borrow & pool" for larger investments.
Confirm Addition: Click "Add liquidity" and approve the transaction in your wallet.
Benefits of Being a Liquidity Provider
Fee Earnings: As a liquidity provider, you’ll earn a share of transaction fees from each trade within your selected market.
Utilize Idle Capital: This is an effective way to generate returns on otherwise idle funds, with a reduced risk of impermanent loss compared to other protocols.
IFICHI's Custom Liquidity Model
Efficient Trading: IFICHI employs a bespoke liquidity model for efficient trading between hTokens and their underlying assets, integrating this seamlessly for a user-friendly experience.
Liquidity Providers' Role: Liquidity providers play a crucial role in maintaining the protocol’s fluidity, facilitating transactions between borrowers and lenders, and earning transaction fees.
Comparison with Uniswap
Consistent Interest Rates: Unlike Uniswap, IFICHI pools offer stable interest rates over time, reducing arbitrage losses and "impermanent loss" for market makers.
Custom Fee Model: IFICHI’s fee structure is optimized for hTokens, ensuring fees are proportional to interest rates and time to maturity, avoiding excessive charges.
Liquidity Provider Shares
LP Tokens: Providing liquidity in a specific hToken pool, like hUSDCMar22, grants you corresponding LP tokens (e.g., hUSDCMar22LP), representing your stake in the pool.
BSC-20 Compatibility: These LP tokens are BSC-20 tokens, allowing for further composition within the DeFi ecosystem.
Trading hTokens with Different Maturities
Manual Swapping: Swapping hTokens of differing maturities requires manual processing by the user.
Market Impact Analysis
Reduced Market Impact: The Yield Space model minimizes the market impact for traders, particularly beneficial for hTokens nearing maturity.
Performance Comparison: The chart comparing Uniswap and the IFICHI Pool demonstrates better interest rates and market quotes for hUSDC/USDC trades in the IFICHI Pool.
IFICHI's approach to liquidity provision offers users the opportunity to contribute to the protocol’s efficiency while earning rewards, with a unique model that distinguishes it from traditional AMM platforms like Uniswap.
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