Liquidity Providers
SKNK offers liquidity providers (LPs) a way to earn from player activity by seeding prize pools in games. As an LP, you fund the core mechanics of gameplay, and in return, you earn a share of the activity.
How It Works
LPs provide two-sided token liquidity, similar to Uniswap V2, into their target pool. This enables trades on the SKNK DEX and acts as liquidity for games built on top of the SKNK protocol. As tickets are opened against the protocol, a target pair is selected for gameplay.
A winning ticket will remove funds from one side of that pool (and incur an LP loss), a losing ticket will pay into the pool and proportionally boost LP positions.
Liquidity providers have a 1% pool edge over players and hold this advantage over tickets made in the pool.
How LPs Earn
Your yield depends heavily on the player engagement (Volume) and pool sizing.
| Method | Description |
|---|---|
| Losing Tickets | A losing ticket will distribute the player stake proportionally to active LPs. The maximum a player can win is 1% of the active pool, where a player stake has no limit. |
| Trading Fees | Earn trading fees from swaps made on the pair. |
| Volume Yield | More players & traders means greater possible returns for LPs. Larger pools allow for larger potential payouts for players. |
⚠️ Risk Assessment
Being an LP means you are actively funding gameplay. Please review the following risks carefully before participating.
1. Capital Risk
Your liquidity position is used to payout winning player tickets. Depending on game odds, your capital may increase or decrease. There is no guarantee of profit - returns depend on player activity and the outcome of randomness.
2. Smart Contract Risk
SKNK is experimental technology. All games are on-chain. While contracts are tested, no system is 100% immune to bugs or exploits. It may contain issues, malfunction, or perform unexpectedly. Exercise caution and conduct your own research.
3. Market Volatility
Your liquidity position is also used to facilitate trades on the SKNK DEX. You are exposed to market price fluctuations and impermanent loss, regardless of game performance.