Liquidity Providers
Last updated
Last updated
Surge operates on a robust liquidity model centred around its USD pool, designed to ensure seamless trading experiences for users.
The central USD pool serves as the backbone of the platform, acting as the counterparty for every trade executed on the platform. This means that when a trader opens a position, the pool takes the opposite side of that trade, allowing for real-time execution and providing traders with the necessary liquidity to enter and exit positions efficiently.
The USD pool earns fees through the opening/closing of trades and funding paid by traders. This structure not only compensates liquidity providers but also enhances the overall sustainability of the exchange. As trading activity increases, the volume of fees generated rises, directly benefiting LPs through potential rewards. For more details on the Surge USD central pool, see here: https://www.surge.trade/liquidity
Liquidity providers can easily add or remove liquidity from the Surge USD pool. To add liquidity, users deposit xUSDC or sUSD into the pool, receiving Surge Liquidity Provider (SLP) tokens in return, which represent their share of the pool. When LPs wish to withdraw their funds, they can redeem their SLP tokens for the equivalent amount of xUSDC, plus any accrued fees. This straightforward process ensures that LPs can efficiently manage their investments while supporting the platform's liquidity.
Add USD Liquidity here: https://www.surge.trade/liquidity
Equally removing USD liquidity can be done in xUSDC or sUSD
There are a few key points on removing your USD liquidity from the Surge USD pool:
The USD value of your Liquidity Providing may have increased or decreased so you may get less back than you put in.
When removing you are charged 0.10% to prevent Liquidity Providers from trying to use LP as means of trading
On rare occasions the pool is at maximum skew risk and needs all the USD in the pool to operate safely so the protocol will not allow you remove your USD liquidity until this risk as been reduced.
To encourage active participation and deepen the liquidity within the USD pool, Surge is launching an initial airdrop program. A total of 2 million SRG tokens will be allocated to LPs contributing xUSDC during the first 180 days of the exchange’s launch. Rewards will be distributed shortly after this period, providing a significant incentive for liquidity providers to support the platform. More details can be found on this blog post.
By participating as a liquidity provider, users not only support the Surge Perpetual Exchange’s operations but also stand to benefit from transaction fees and the initial airdrop.
Risks of Liquidity Provision: Note that LPs providing liquidity to the pool take the opposite side of trades.
Against this, LPs earn fees from trading activity.
LPs could incur losses if traders, on aggregate, are very profitable and the fees generated are not sufficient compensation.
