Liquidity Pools

A summary of the EURC liquidity pools.

Liquidity Provider

A liquidity pool is a trading pair of 2 crypto assets. A Liquidity Provider (LP) is someone who deposits the required trading pair into the liquidity pool in order to provide liquidity.

In order to participate in a liquidity pool an equivalent trading pair must be deposited by the LP and the funds deposited are locked into the liquidity pool.

Example: LP deposits 5 XLM and 1 EURC into the XLM/EURC liquidity pool.

The LP now has the opportunity to earn a share of the transaction fee charged for every transaction conducted against the XLM/EURC liquidity pool by all the available exchanges on the Stellar blockchain network.

LP's earn a percentage of liquidity pool transaction fees.

The share earned by the LP is proportional to the total size of the liquidity added to the liquidity pool by the LP in relation to the size of the liquidity pool.

Example:

XLM and EURC with a total value of 5,000 EUR is deposited into the XLM/EURC liquidity pool by a LP.

Assuming the total size of the liquidity pool is 1,000,000 EUR, the LP now has a 0.5% share of the liquidity pool.

The LP will now earn 0.5% of the transaction fee charged on every trade conducted against the liquidity pool.

This process occurs via the Stellar blockchain Automated Market Maker (AMM). The Stellar AMM is one of the earliest Layer 1 blockchains with a protocol-native feature for AMMs.

XLM - EURC Liquidity Pool

The XLM - EURC liquidity pool is the trading pair of XLM; the native Stellar token and EURC.

The target is to have 500,000 EUR of locked in value in the XLM/EURC liquidity pool before the end of the first quarter of 2023.

EURC - USDC Liquidity Pool

The EURC - USDC liquidity pool is the trading pair of the worlds two top currencies. The EURC and USDC on Stellar which is operated by Circle.

The target is to have 500,000 EUR of locked in value in the EURC/USDC liquidity pool before the end of the first quarter of 2023.