Liquidity

Risks

Providing liquidity on Futureswap is not risk-free. Futureswap has been audited for over 10 weeks by industry-leading firms such as OpenZeppelin and Trail of Bits. This does not mean that there are no exploits in the code or economically. Futureswap is in Beta and is experimental and users should do their own risk assessment.

Futureswap Liquidity Providers[LP] deposit equal value amounts of asset and stable and these assets will stay relatively balanced on a value basis through market shifts. This means that LPs can have impermanent loss.

Futureswap allows trades to occur even when there is no opposite trade to cover the exposure. Liquidity providers will have a loss if the exposed position is profitable. There are several mechanisms in place to incentivize against this risk for liquidity providers including the Funding Rate and Scaling Market Price.

Adding Liquidity

Adding liquidity requires depositing an equivalent value of the pool’s Asset and Stable tokens into the ERC20 token's associated exchange contract. There is a votable 0.1% entrance fee given to existing LP's. Futureswap aims to have long term capital provided for liquidity as this provides the most stable trading experience.

Removing Liquidity

To remove liquidity from a Futureswap exchange you will need to sign a withdraw message from the Pool's page. Withdrawing requires the amount is not being currently utilized by trades. It gets the balance of the available liquidity of the tokens in the pool and then multiplies it by how much of the liquidity tokens you own.

Since Futureswap aims to have long term capital provided for liquidity and to mitigate attacks exiting liquidity providers will partake in open interest loss but not open interest profit. This means that if there are significantly positive and negative trades withdrawing liquidity will only yield the exiting LP the loss from the currently open trades and not the profit. This can result in loss for providing short term liquidity.