What is it to be a provider - Am I giving my tokens away for a percentage of trading fees?
Short Answer: No, you are not giving your tokens away. Explanation: Liquidity Providers are not giving away their tokens. The value of tokens that providers input is the same value providers will receive on output when tokens are withdrawn minus performance fee. The principle deposit (the liquidity provided) is redeemable. The earnings made from trading fees are the profits rewarded for providing tokens.
Although the principle value is redeemable, the token ratio that the provider deposits may be returned in a different ratio, but still amounting to the same value. This is dependent on the activity of trades in the associated pool. Example: You provide 1 BNB at a value of $300 and $300 BUSD = A pair worth $600 Pool = BNB $300 BUSD $300 = $600 Liquidity
- A trader visits TallySWAP and buys $200 worth of BNB with $200 of BUSD Pool Status= BNB $100 BUSD $500 = $600 Liquidity He/She has taken $200 worth of BNB out of the pool and put $200 of BUSD into the pool
- If you remove liquidity at this point, you will redeem $100 worth of BNB and $500 BUSD = $600
Banks, institutions and currency bureaus are in the business of providing liquidity; this is a lucrative way of using money to make money.
- Instead of leaving tokens in a wallet doing absolutely nothing but go up and down in value, parking your tokens on Tally Exchange could earn a passive income. It allows the exchange to use your tokens for others to trade. Supply and demand can be rewarding generating income through trading fees. Useful for those tokens you plan to hold for a while. Let those tokens work for you in the meantime.
- Some Liquidity Providers are seeking passive income streams. They do more than simply providing tokens they already hold, they also provide token pairs that are popular trades. This is an opportunity to earn from high trade volume.
Whereas with centralised exchanges that are propped by big backers and earn big profits, Tally Exchange is a peer-to-peer decentralised platform bringing those same opportunities to the general public. Tally Exchange is focused on allowing the masses to practise similar activities with their funds. Decentralised Exchanges allow the people to provide tokens to each other without an intermediate or broker.
Affordability was one of the prime concerns when developing Tally. If it were true that you cannot make use of the features provided here, then this project is not meeting its goals. This is where you find the difference between platforms. Some are built with affordability in mind and community focused sharing profits and keeping profits within the community. It is not about how much the individual has, or how much one individual can add to liquidity. It is about how many people can add together as a community working together to provide a functional exchange that is driven for the community and by the growing community. You can add as little or as much as you can afford. There is no minimum or limit.