The company notes various Merits of Pool Funding to the Participants.
GAINPOOL, the first one-stop-shop for early project investors to have a diversified exposure to DeFi projects, has announced that it will use pool and staking approach to deliver its solutions. Liquidity pools are essential because they facilitate decentralized transactions, loaning, and many other functions. GainPool encourages participants to place their tokens into liquidity pools and staking to benefit from this technique.
Liquid Providers (LPs) will enjoy a reward in the form of fees for providing their finances once trading occurs in the pools. The compensation they receive is equivalent to their share in the pool.
Merits of using Liquid Pools
A DeFi project that uses the pool funding technique delivers multiple benefits to liquid providers. Some of the perks of using this approach include:
- Reduced Gas Fees: Many crypto users encounter huge gas fees while using the ERC20 network. The good news is that the cost is reduced for liquid providers.
- Anyone can participate: Liquidity pool is a straightforward concept which doesn’t need listing fees, KYC, or other barriers that exist in DEXs. As an investor, you only deposit a pair of tokens with the equivalent value.
- Additional incentives: different programs and protocols provide extra incentives to LPs to continue holding huge pools, ultimately reducing slippages. For example, LPs have a chance to enjoy more perks through yield farming reward tokens.
- Automated pricing: the role of LPs is to dip their tokens into the pools. The program’s smart contract determines the rates of their investments.
- Quick close border transactions: projects using this methodology can marshal up massive funds as they attract LPs from all over the world through intelligent contracts.
- Reduction of risks: using this approach reduces the risks inherent in DeFi projects, as pools act as insurance for token holders.
Staking and Liquidity in GainPool
Gainpool encourages participants to use its staking methodology to deposit tokens in the liquidity pools. This technique is critical because it enables participants to earn passive income and keeps the platform secure. In the GainPool environment, participants stake their tokens at a ratio of 1:1. Users who stake more $GAIN tokens earn more income.
How staking happens on GainPool project
If a user wishes to stake paired pools, they pay a platform fee of 3%. On the other hand, users who stake for a single pool don’t incur any platform expenses. The good thing is that users can claim their bonus any time they want. Users who wish to unstake have seventy two (72) hours to do so. The unstacking period isn’t applicable for LPs.
The moment an LP deposits tokens into the pool, unique tokens called liquidity tokens are mined to the LP’s address at a rate reflecting their contribution into the pool. When an exchange occurs, the amount of fees from the trade is apportioned to liquidity providers proportionally.
If the LPs wish to claim back their tokens and any fees they attracted, they must burn their liquidity tokens. LPs can use their rewards in any way they deem fit. For example, they can trade or transfer their rewards.
For $GAIN token holders, participation can only occur after a grace period of seven (7) days. So, if you want to participate, ensure that you’re in the pool seven (7) days before placing your tokens into the pool.
GainPool uses an in-house collective mechanism to bring financial freedom to the public in the DeFi environment. The company uses the liquid pool approach to ensure safety of the program and to enable participants earn passive income.