> For the complete documentation index, see [llms.txt](https://faqs.iotabee.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://faqs.iotabee.com/about-defi/what-is-a-liquidity-provider-lp-and-shall-i-be-one.md).

# What is a liquidity provider (LP) and shall I be one?

In general, liquidity providers are those who earn passive income by providing tokens (liquidity) to a trading pool. They earn passive incomes by obtaining a share of the trading fees for each transaction in the pool to which they provide liquidity. On Iotabee, 5/6 of the trading fees go to liquidity providers.

**Liquidity Provider Explained:** 

{% embed url="<https://medium.com/@iotabee/earning-passive-income-in-dex-becoming-a-liquidity-provider-and-its-associated-gains-risks-fecc59afaba8>" %}

**The gains of being a liquidity provider - APR explained:**&#x20;

{% embed url="<https://medium.com/@iotabee/being-lp-with-iotabee-part-i-apr-explained-2428fcb6c08b>" %}

**The riskes of being a liquidity provider - Impermanent Loss Explained**

{% embed url="<https://medium.com/@iotabee/being-lp-with-iotabee-part-ii-impermanent-loss-explained-7a1c81664855>" %}


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