Liquidity providers form the backbone of uTrade, so it is imperative they are well incentivized to fund liquidity pools.
The Unifi Protocol will create a community of liquidity providers and traders that won’t see their rewards diluted as more users are attracted to the platform. The UP and Unifi token incentives listed below will demonstrate how increased trading activity benefits everyone in the Unifi ecosystem.
Let’s briefly outline the incentives offered to Liquidity Providers by the Unifi Protocol:
- Liquidity providers earn a share of the fees generated by the pair they funded, in UP tokens.
- As the community grows, UP tokens on each blockchain will be used to enable decentralized governance of the protocol on that particular blockchain.
- UP tokens can be used to gain access to the global protocol governance token, Unifi Token. Unifi allows freedom of movement between different UP economies, creating arbitrage opportunities only available to UP token holders.
- Through earning UP, liquidity providers earn a share of fees from every trade in every pairing across the platform. Holding UP token automatically ensures liquidity providers in any pool benefit from the combined success of the entire platform.
- Even after liquidity providers withdraw their liquidity, they continue to earn a share of all fees as long as they hold UP.
- UP goes up in redemption value every time a trade is made. This can assist liquidity providers that might be concerned about impermanent loss.
- UP goes up in redemption value from other transactions that occur on the Unifi Protocol. This includes any variety of DeFi platforms and other products built using Unifi smart contracts, by any developer.
*The fee structure has changed to be even more rewarding on V2 of uTrade, earn more here.