KLEX Liquidity Provision
There are a few different types of fees on Klex, each collected to support a healthy ecosystem. For example, Liquidity Providers collect swap fees as users trade with pools; this acts as an incentive for them to continue providing liquidity, which is useful to facilitate trades.
Traders pay swap fees when they trade with a pool. The fees ultimately go to Liquidity Providers in exchange for them putting their tokens in the pool to facilitate trades. Trade fees are collected at the time of a swap, and it goes directly into the pool, growing the pool's balance. For a trade with a given
, the amount collected by the pool as a fee is
. As the pool collects fees, Pool Tokens automatically collect fees because they represent a proportional share of the pool.
Let's say Alice, Bob, Chuck, and Diana all provide liquidity in the same pool starting out with a total value of $100. After some time, the pool has collected many trade fees and is now worth $200. The pool itself grows while the Liquidity Providers' proportional shares stay the same.