# Liquidity Pools

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Liquidity pools allow you to provide liquidity by adding your tokens to liquidity pools.

When you add your token to a liquidity pool, you will receive Liquidity Pool (LP) tokens called TRI-LP.

As an example, if you deposited TRI and KAIA into a liquidity pool, you would receive TRI-KAIA LP tokens.

The number of LP tokens you receive represents your portion of the TRI-KAIA liquidity pool.

You can also redeem your funds at any time by removing your liquidity.

Providing liquidity is not without risk, as you may be exposed to impermanent loss.

It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. For example, whenever someone trades MermaidSwap, the trader pays a 0.3% fee, of which 0.24% is added to the liquidity pool of the swap pair they traded on.

For example:

* 10 LP tokens are representing 10 TRI and 10 KAIA tokens.
* 1 LP token = 1 TRI + 1 KAIA
* Someone trades 10 TRI for 10 KAIA
* Someone else trades 10 KAIA for 10 TRI.
* The TRI/KAIA liquidity pool now has 10.024 TRI and 10.024 KAIA.
* Each LP token is now worth 1.00024 TRI+ 1.00024 KAIA.

To make being a liquidity provider even more worth your while, you can also put your LP tokens to work whipping up some fresh yield on the Yield Farms while still earning your 0.10% trading fee reward.

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