Scenario 1
Let’s assume User A comes to provide liquidity to an ETH-USDT pool, he can get on board by providing $10,000 worth of liquidity with $5,000 worth of ETH and $5,000 worth of USDT. If he feels the market can go in one direction, let's assume he feels the market can crash. He can use the same dashboard to modify the position suitable for a downtrend market. This will be done by removing USDT liquidity provided by the user. The LP token representing this part of the liquidity will be made available to the market from where other users can buy that position.
The USDT position will start earning a fee from the time it gets added to the market, the user who buys this position gets the fee collected over the time until it gets bought. This makes the position more attractive and competitive as users can get discounted LP positions.
Once User B takes on this discounted LP position, he can earn from single token liquidity. This ensures the liquidity to be intact while the LPs trade their LP positions by forecasting the market.
Last modified 1yr ago