Mining (AMM Liquidity Mining)
Liquidity

Overview

Liquidity providers provide liquidity to Deri pools to mine yield paid in DERI tokens. The provided liquidity can be withdrawn at any time and solely through the address with which the liquidity has been added.
In general, it is essential to comprehend that liquidity providers are the counterparts of traders on Deri Protocol. When traders realize profits, they do so at the expense of liquidity provider's provided liquidity. When traders realize losses or are liquidated, liquidity providers realize profits at the expense of traders.
To mitigate the risk of losses for liquidity providers, those receive 20% of all transaction fees paid by traders belonging to the same pool, likewise liquidity providers receive remaining margins from liquidations, if a traders position is liquidated. In addition, they may also earn from the funding fees. With these potentially attractive compensations, we reduce the risk of losses for liquidity miners and facilitate the ability to offer liquidity on Deri Protocol to a degree to potentially even leading to a positive PnL, beside the always certain yield earned in DERI tokens.
Liquidity providers also earn additional yield from the money market protocol - interest and also the protocol's liquidity mining reward while providing liquidity (only v3 pools).
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Transaction fees
Funding Fee (Perpetual Futures)
Funding Fee (Everlasting Options)
yield/mining rewards (only v3)
Liquidation
Liquidity Providers
Receiving (20%)
Receiving
Minority long side: Paying Minority short side: Receiving
Receiving
up to 1000$ 50%, over 1000$ >50%
Trader
Paying
Minority side: Receiving Majority side: Paying
Long: Paying Short: Receiving
Receiving
N/A
Specifically, there are two types of potential returns, one with market risk:

I. Yield of DERI token

The APY shown on each liquidity pool refers to this part of yield.
As a miner, you earn your DERI reward (APY), proportional to the dollar value and the time length (i.e. timed value) of your liquidity contribution.
On Pools section you can monitor your current unclaimed DERI mining rewards, collected across all staked pools on the upper left side. You can claim them by clicking on the CLAIM button. Please note that you will need to pay transaction fees in order to claim your DERI reward tokens.

II. Base token Profit (with Market Risk)

As mentioned above the Liquidity provider's PnL, which reflects your profits and losses, is an interplay of various fees paid & received, possible liquidations, profits and losses of the counterpart.
Specifically, there are certain and uncertain profits you may earn as a liquidity provider. For this part of profits, your liquidity (base token, e.g. BUSD) is exposed to market risk since you act as counterpart to the trader's position. All of the following certain and uncertain profits are paid in the Base token currency. (e.g. BUSD)
Certain Profits:
  1. 1.
    20% of the transaction fees paid by traders flow into the liquidity pool and are shared between the liquidity providers. (This percentage is the result of DIP2).
  2. 2.
    Perpetual Futures Pools: The funding fee is always paid by Perpetual Futures traders on the majority side to minority side. And since the pool including its liquidity providers are always on the minority side, Liquidity providers receive funding fees. This fee amount is dynamic and adjusts to the net position (Total size of long position minus total size of short position held by traders).
  3. 3.
    When the trader is liquidated, the remaining margin is shared between the liquidators and the liquidity providers. Up to a certain amount (e.g. ~2000 USD), the remaining margin position is shared in half, whereby for larger margin positions, the LP's overall share increases, as the liquidators' profit is capped at a limit (e.g. ~1000 USD).
  4. 4.
    Additional yield from the money market protocol - interest and also the protocol's liquidity mining rewards. (only v3 pools)
Uncertain Profits:
  1. 1.
    An uncertain but possible, loss of a trader increases your LSV or Mining PnL.
  2. 2.
    Everlasting Options Pools: The funding fee is always paid by Long-positions to short positions. Unlike Perpetual Futures pools, if there are more short than long positions in the pool, liquidity providers cover the difference and switch to the long side. Since long always pays short, liquidity providers pay funding fees to the short traders. If long positions exceed short positions, liquidity providers take the short side and receive funding fees. This possible profit is in your Base token currency
Market Risk:
  1. 1.
    An uncertain but possible profit of a trader decreases your LSV or Mining PnL. To the extent that it can become negative. Nevertheless, the probability of market loss on Deri liquidity mining is much smaller than for e.g. that of Uniswap due to the protection of arbitrageurs. This uncertain, but possible loss is in your Base token currency
  2. 2.
    While liquidity providers are always on the minority side on perpetual futures pools (i.e. they earn funding fees), they can (but don't have to) be on the majority side on Everlasting Options pools (i.e. they pay funding fees), since Long always pay short. Therefore, if the liquidity providers take the long side, they pay funding fees to the short side. This possible loss is in your Base token currency
Liquidity provider's profit (or loss) in base token is reflected in the change of Liquidity Share Value (LSV) or Mining PnL. You can calculate your base token total by multiplying the LSV with the Staked Balance, shown on the pool info overview.

Supported Networks

Deri Protocol runs completely on-chain and does not require any registration as on centralized exchanges. To mine on Deri Protocol users require a non custodial wallet located on the following Blockchains:
  • Binance Smart Chain (BSC)
  • Polygon
  • Ethereum (currently inactive)
  • Huobi ECO Chain (Heco) (currently inactive)
Got questions about AMM Liquidity Mining on Deri Protocol? Check out our Mining FAQ​

Is AMM Liquidity Mining on Deri pools risk-free?

No, it isn't. In general, it is essential to comprehend that liquidity providers are the counterparts of traders on Deri Protocol. When traders realize profits, they do so at the expense of liquidity provider's provided liquidity. When traders realize losses or are liquidated, liquidity providers realize profits at the expense of traders.
To mitigate the risk of losses for liquidity providers, those receive 20% of all transaction fees paid by traders belonging to the same pool, likewise liquidity providers receive remaining margins from liquidations, if a traders position is liquidated. In addition, they may also earn from the funding fees.
However, please note that such market risk is different from the impermanent loss of spot exchanges (e.g. Uniswap or Sushiswap). First of all, the fact it is called "risk", instead of "loss", indicates that the mining PnL (i.e Profit & Loss) result could be negative but also positive (which depends on several factors such as funding & transaction fees, exceeding traders' profits & realizing them, etc.). Secondly, the probability of a negative result (a loss) on Deri liquidity mining pools is much smaller than that of typical spot exchanges due to the protection by arbitrageurs, although a certain market risk remains. You might think of liquidity mining on Deri as investing in a low-risk fund with potentially very high profit, whereas that risk-free liquidity mining is like depositing your money into a bank saving account.
Please refer to our whitepaper for further details regarding the protection by the arbitrage mechanism.
Last modified 1d ago