LunarDex offers users a simple way to provide liquidity for tokens on MoonBeam via automated liquidity pools (LPs). To become a liquidity provider on LunarDEX, a user must deposit equal values of two tokens. In return, they receive LUNAR-LP tokens. LUNAR-LP tokens represent a proportional share of the given LP and liquidity providers may claim their underlying tokens anytime. Liquidity providers receive a 0.25% fee for every swap that is made in their pair. The 0.25% fee is directly added back to the LP, increasing the value of LUNAR-LP tokens. Liquidity providers can also participate in yield farming with supported LPs.
Anyone can make a LP on LunarDEX, with any two tokens (on MoonBeam) of their choice. When an LP is created, the creator sets the price of the tokens. The amount of LUNAR-LP shares minted are based on the equation:
L-LP=sqrt(x∗y)L-LP = sqrt(x*y)L-LP=sqrt(x∗y)