How liquidity providers earn

The pool is the other side of every position. Notes earn when traders lose and pay out when they win.

The pool is the other side of every position. What a trader pays goes into the pool. If the position loses, it stays there. If it wins, the pool pays it.

The margin is the edge

Every position’s price carries the pool’s margin, 5% of the price. Over many positions, the losers’ stakes pay the winners and the margin is left.

The protocol keeps half of the margin, up to the base 5%. Liquidity providers keep the rest, including any extra paid for a position on a crowded side.

The protocol earns its half even when liquidity providers lose.

Edge, not promise

The margin is an edge over many positions, not a promise on any one. Some positions win big, and some stretches lose money. A year can lose money too.

More money, same positions

More money in the pool lets it take more positions, but only if traders bring them. Otherwise, the same profit is shared by more notes, and each note earns less.