💰Providing Liquidity
Become a liquidity provider to earn up to 30% APY in USDT, USDC or DAI
What does it mean to 'provide liquidity'?
Typically, CFD brokerages (like DXS) outsource their market-making function to liquidity cartels, established exchanges or financial institutions.
DXS is unique in that it outsources the liquidity function to an unbiased autonomous not-for-profit entity: The Open Liquidity Protocol (OLP). The OLP is covered in deeper technical detail in the below link:
🤝Open Liquidity ProtocolThe OLP itself is funded by the public. Becoming an OLP liquidity provider is a first-ever opportunity for retail investors to generate yield from trading losses. No longer is this opportunity exclusively accessible to backbone market participants:
How do I provide liquidity?
💵Get Started as a Liquidity ProviderOn the account screen of DXS, click 'Provide Liquidity', enter your desired contribution amount, accept the Liquidity Provider Agreement and click 'Send':
You can also find the 'Provide Liquidity' button in the DXS account menu:
Why wouldn't I just contribute liquidity to Uniswap?
Yield opportunities elsewhere are too low! DXS will achieve 30% APY for USD liquidity providers:
What about KYC?
KYC is not required for liquidity contributions of <$1k total
Phone verification is required for liquidity contributions between $1k and $10k total
Full KYC is required for liquidity contributions >10k total
Any restricted jurisdictions?
This opportunity is not available to citizens or residents of the U.S.A., Canada, Seychelles, Switzerland, the U.K., Algeria, Ecuador, Iran, Syria, North Korea, Sudan, United States Minor Outlying Islands, Anguilla, Antigua and Barbuda, Dominica, Grenada, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines, American Samoa
When do I get paid?
Liquidity provider returns get paid at midnight UTC every day. You receive your daily payment instantly into your linked Web3 wallet:
How much will I get paid each day?
Liquidity providers earn their proportional share of 3% of trading losses generated each day on DXS. Consider the below example scenario:
Liquidity provider contribution = $10,000
Total liquidity provided = $1,000,000
Liquidity provider share of pool = 1%
Trading losses for the day = $1,000
Liquidity provider payment = $10
Liquidity providers can check their liquidity provided, payments received and pending payments on their liquidity dashboard:
Additionally, trading losses each day can be viewed on the DXS Stats page:
What will my APY be?
Your APY is fundamentally dependent upon trading losses generated on DXS. In a more practical sense, your APY is dependent upon the number of active traders on DXS.
In the 2 year history of DXS, APY per active trader has averaged 0.015%. With an active trader base of c. 630 traders, absolute APY has been 9.5%:
DXS has an immediate growth strategy to kickstart the USD-backed user base from 0 to 2,000 active traders. Using the historical APY per active trader of 0.015%, 2,000 active traders will result in 30% APY.
Can APY grow beyond 30%?
There is a conditional liquidity pool cap of $3.78M which limits the dilution of liquidity stakes until and unless the APY reaches 30%. Assuming the historical APY per user remains intact, 30% APY is achievable at 2k active traders.
When the 90 day moving average APY rises above 30%, funding round 28* will be opened allowing contributions to the liquidity pool to grow beyond $3.78M.
When the 90 day moving average APY falls below 30%, funding round 28* will be closed halting contributions to the liquidity pool until APY rises above 30% again *Funding round 28 is unlimited in size.
How long will I get paid for?
The lifetime of your daily return payments depends on two things:
Your actual APY
As discussed above, this is dependent upon the number of active traders on DXS
The funding round(s) you contributed to
Funding rounds dictate the total amount of interest payable on your liquidity contribution. Early rounds = more interest payable = longer lifetime of returns
Your payments will continue until you have received the total amount of interest payable plus the initial liquidity contribution amount.
What are funding rounds?
USD liquidity pool funding is structured as 27 rounds of increasing size. Each round has an individual limit and an overall limit. Individual limits are in place to ensure that earlier, more favorable rounds are widely participated in. You can view the rounds by clicking on 'Provide Liquidity' and then 'Learn more' within DXS:
Overall round sizes are as follows: round 1 is $10k, round 2 is $20k, round 3 is $30k and so on. The pool reaches its limit of $3.78M when all 27 rounds are filled.
Surely you want the liquidity pool to grow beyond $3.78M?
There is a conditional liquidity pool cap of $3.78M which limits the dilution of liquidity stakes until and unless the APY reaches 30%. Assuming the historical APY per user remains intact, 30% APY is achievable at 2k active traders.
When the 90 day moving average APY rises above 30%, funding round 28* will be opened allowing contributions to the liquidity pool to grow beyond $3.78M.
When the 90 day moving average APY falls below 30%, funding round 28* will be closed halting contributions to the liquidity pool until APY rises above 30% again *Funding round 28 is unlimited in size.
Is liquidity pool funding capped?
There is a conditional liquidity pool cap of $3.78M which limits the dilution of liquidity stakes until and unless the APY reaches 30%. Assuming the historical APY per user remains intact, 30% APY is achievable at 2k active traders.
When the 90 day moving average APY rises above 30%, funding round 28* will be opened allowing contributions to the liquidity pool to grow beyond $3.78M.
When the 90 day moving average APY falls below 30%, funding round 28* will be closed halting contributions to the liquidity pool until APY rises above 30% again *Funding round 28 is unlimited in size.
Does every funding round have the same APY?
Yes, all funding rounds have the same APY. The difference between funding rounds is the total interest receivable. A liquidity contributor in round 1 will receive daily yield for longer than a liquidity contributor in round 27:
Can I withdraw / refund my liquidity contribution?
Absolutely! There is only one thing to consider:
If you withdraw your liquidity contribution from the liquidity pool prior to 365 days, you will receive your initial liquidity contribution amount back LESS any interest payments already received. You will have to wait 365 days from the day of withdrawal to receive your remaining liquidity contribution amount
The above restriction is in place to encourage liquidity providers to take a longer-term view when providing liquidity.
Understanding this, liquidity can be withdrawn by clicking on 'Liquidity Dashboard' within DXS and then clicking 'Refund on Demand':
If a liquidity provider requests a refund, can I contribute in their place?
Yes! When an existing liquidity provider withdraws their liquidity contribution, it frees up space in the round that they left.
What is the market theory that supports the liquidity pool's design?
Bid/ask spreads, holding fees, liquidity fees, leverage and market theory are all forces that ensure more traders lose than win. On average, 76.3% of traders lose money:
DXS profitable accounts percentage is displayed on the DXS Stats page.
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