> For the complete documentation index, see [llms.txt](https://oscarswap-official.gitbook.io/oscarswap-official/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://oscarswap-official.gitbook.io/oscarswap-official/product-features/oscar-swap-dex/liquidity-providers.md).

# Liquidity Providers

### What are Liquidity Pools ?

A liquidity pool is a collection of tokens that are locked in a smart contract and used to facilitate trading on a decentralized exchange. Liquidity providers can deposit their tokens into the pool and earn a portion of the trading fees as a reward for providing liquidity.\
\
At Oscarswap, users can provide liquidity to pools and earn LP tokens (OscarLP Liquidity Provider tokens) as proof of providing liquidity. By depositing funds into a pool, such as $OSCAR and $ETH, users receive OSCAR-ETH LP tokens that represent a proportional share of the pooled assets. These tokens can be withdrawn by users at any time, allowing them to earn rewards while maintaining flexibility over their funds.

## What are the Fees?

When the users trade $OSCAR and $ETH in a pool on Oscarswap, a 0.25% fee is charged on the  (take-in position) trade. From this fee, 0.05% is returned to the liquidity pool and the 0.05% for LP rewards 0.02% for the team 0.08% for treasury fund 0.10% for staking rewards.

A 0.25% fee is charged for the (take-out) transaction. Same as for take in position.

Our aim is to keep the fees as low as possible while providing attractive rewards to liquidity providers. This strategy is crucial to ensuring the long-term viability and stability of the decentralized exchange.&#x20;

### How can one offer liquidity on Oscarswap?

Users can add liquidity to a trading pair by selecting the desired pair and clicking on the "Add Liquidity" button. The platform will then prompt the user to provide an equal value for both tokens in the pair. The user can then confirm the transaction in their wallet. In cases where the user does not have an equal amount of both tokens, the platform will automatically swap the necessary amount to create a balanced liquidity pool.

In a nutshell, Oscarswap's liquidity pools allow users to utilize their tokens and receive LP tokens as rewards. The exchange distributes trading fees among LP pools as an incentive for liquidity providers. Adding liquidity is a simple process that only requires a single token.

<figure><img src="/files/NWuAtZXqCm1HAMuZWMYi" alt=""><figcaption></figcaption></figure>


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