Providing Liquidity

The third feature of the Liquid Finance protocol is Providing Liquidity.

On the app, the user should navigate to the "Queue" tab. This is where users can supply their ARCH tokens to earn liquidity providing incentives as well as a portion of the instant unstaking fee.

Instant Unstaking Queue

ARCH tokens supplied through this feature are deposited into the Liquid Finance Instant Unstaking Queue.

The Instant Unstaking Queue works as a first-in-first-out (FIFO) queue system where the first user to provide liquidity to the queue will be the first person to have their ARCH swapped for sARCH when someone performs an instant unstaking operation.

When an instant unstaking request is received, as long as enough liquidity is present the queue system fills the order, swapping the liquid ARCH tokens for sARCH tokens. More than one user in the queue could be swapped against.

While providing liquidity to the Instant Unstaking Queue, LPs will receive ARCH token incentives provided by the Liquid Finance protocol as well as 50% of the instant unstaking fee (0.50% of the unstaked amount).

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When choosing to Provide Liquidity, users will have two options to choose from:

Active Liquidity Management

Users can withdraw their liquidity at any time in the "Liquidity details" section and can claim their ARCH incentives and/or the sARCH they received after a swap in the "Rewards" section.

Passive Liquidity Management (coming soon)

Users have the ability to "opt-in" to our passive management feature for liquidity providers by turning on the "Compound" button before depositing their liquidity.

This feature allows users to provide liquidity passively while compounding their LP rewards.

The way this works is when a user's ARCH liquidity is swapped against during an instant unstaking request, the protocol automatically requests to undergo the delayed unstaking process for those sARCH tokens. Once the unstaked ARCH tokens are available to claim the protocol will claim them and re-stake them within the queue along with the ARCH incentives and instant unstaking fee earned from being a liquidity provider within the queue.

Users can withdraw their liquidity in the "Liquidity details" section. Unlike the active liquidity management option users may need to wait in a Withdraw Queue to receive their entire liquidity position. This is because a portion of the user's liquidity may be undergoing the delayed unstaking process that was automatically triggered by the protocol when they were swapped against.

Users can still request to withdraw their full amount of liquidity but if any of their liquidity is still undergoing delayed unstaking they will see the amount they have in the withdraw queue in the "Withdraw details" section.

When a user requests to withdraw their liquidity they will find their claimable amount under "Claim details".