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Liquidity provision and farming

Liquidity providers (LPs) are able to provide liquidity to pools to allow traders to swap their tokens, in return for trading fees as well as additional farming incentives. These are two separate things; farming rewards are paid out in the form of either fNFTs or other tokens such as PBLO or PICA, while 80% of trading fees generated are accrued back to the pool itself and 20% are distributed to xPBLO stakers.

For example, one of the first LPs on Pablo will be for PICA and KSM. Users will be able to provide liquidity to this pool, allowing other users to efficiently swap their tokens on the Picasso chain. To begin with, there will be no other place to buy or sell PICA other than on Pablo.

Once users have provided liquidity to this pool, they will then be earning fees generated from other users swapping their assets. When users swap their assets they pay the relevant trading fee, for example 0.2%. This is then distributed back to the pool.

Additionally, to further incentivise liquidity the protocol will allocate PBLO tokens to specific pools. Users who provide liquidity and then stake their LP tokens will therefore be earning additional reward tokens.