Liquidity Providers

In the BRMM model, Liquidity Providers (LPs) act as temporary counterparties to traders:

When users open/close positions, or get liquidated, LPs always passively open/close positions with the same size as the user, but in the opposite direction.

The proportion of passive positions held by any LP relative to the total positions of all LPs, and the proportion of liquidity they provide relative to the total liquidity of all LPs, are always maintained in equivalence.

LPs have three fixed sources of income:

  1. LPs will always earn funding fees from the passive positions they hold.

  2. A portion of protocol funding fees.

  3. Liquidity mining.

In addition to the fixed sources of income, if the passive positions held by LPs have a positive PnL, the LPs will also earn additional profits.

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