Everything you Need to Know about the Meta Pool Liquidity Pool
What is a Liquidity Pool?
A liquidity pool is a large pool of capital that can be used for a variety of purposes. It is generally used to facilitate the swapping of assets on an exchange, for instance.
Meta Pool liquidity pool (LP) uses a collection of funds locked in the meta-pool.near smart contract. As a result, the Meta Pool LP functions as a tool that allows for swapping $stNEAR tokens to $NEAR.
Why does Meta Pool need a Liquidity Pool?
Simply put, Meta Pool needs a liquidity pool to maintain user swaps for liquid unstaking (immediate unstaking). Therefore Meta Pool provides incentives to liquidity providers in the form of commissions for each liquid unstake depending on their share of placed assets.
Meta Pool has made it easy to deposit funds in the liquidity pool and earn a portion of this commission. As a result you only need to deposit the $NEAR token.
When providing liquidity on most DEXs with AMMs, the user is given a liquidity provider (LP) token. This LP token represents the user’s share in the total amount provided liquidity. For instance, DEXs with AMMs (like Ref Finance, Uniswap, Balancer) usually require you to deposit a pair of tokens to receive your LP token.
The liquidity pool on Meta Pool’s smart contract only requires you to deposit one token: $NEAR, the native token of the NEAR network.
When users liquid stake NEAR tokens with Meta Pool, $stNEAR is minted. Unstaking NEAR tokens causes the stNEAR token to be burned. When unstaking, you return your $stNEAR and receive $NEAR in return + the APY generated for the time you were staking.
The unstaker pays a fee — between .3% and 3% typically — which is the commission provided to liquidity providers.
Why Should You Provide Liquidity?
By becoming a liquidity provider on Meta Pool you will receive both a percentage of the liquidity fees, and Meta Pool’s native governance token $META. Earned $META are distributed every Monday.
The liquidity provider earns rewards for every liquid-unstake operation. The APY is fully based on liquid-unstake fees, which is the commission that unstakers pay to swap $stNEAR to $NEAR tokens when unstaking.
For liquid unstakers, the liquidity fee is typically in the range of 0.3% to 3%. It varies linearly according to the quantity of liquidity available in Meta Pool Liquidity Pool (LP).
The rate can vary depending on market conditions and activity. Therefore this means the commission for providing liquidity to the pool can fall. When the market is slow and stagnant and no one is unstaking fees will be lower and so will rewards. Conversely, an active market with lots of unstakes will make the fees high and so will the APY.
Target liquidity can also play a factor in rewards. If liquidity is below its target quantity (which is currently set at 90,000 $NEAR) the unstake fee is higher, and so is the LP reward.
How Can You Provide Liquidity?
To provide liquidity to the Meta Pool liquidity pool go to Meta Pool app, go to Liquidity section and click to add liquidity with 2 $NEAR minimum.
1. Go to the Liquidity tab on Meta Pool’s page
2. Select whether you want to “Add” or “Remove” liquidity
3. Enter the amount of $NEAR to add
4. Confirm and sign the transaction.
With each liquid unstake, the value in the “Your share value” field will increase. This will be influenced by:
- your share in the pool of the total amount of blocked liquidity
- the current liquid unstake fee charged.
Meta Pool’s liquidity pool is the underlying piece of technology that allows a user to free instantly their capital and earn even higher returns — truly unleashing the power of DeFi.
Our new fundraising platform Meta Yield brings the same level freedom with your tokens to a “kickstarter” style platform for developing NEAR projects. Find out more about Meta Yield here, or read more about our latest fundraiser.
About Meta Pool & stNEAR
Meta Pool is the leading liquid staking solution for $NEAR and wNEAR token holders to earn staking rewards and maintain their liquidity to participate in DeFi protocols on NEAR and Aurora.
Users staking $NEAR and wNEAR with Meta Pool receive in exchange a NEP-141 standard token, stNEAR (staked NEAR).
stNEAR simultaneously accrues staking rewards and unlocks users’ liquidity enabling them to participate in DeFi activities (e.g. lending, farming, borrowing) on NEAR and Aurora.
Meta Pool solves the problems associated with Proof-of-Stake networks staking: illiquidity, immovability and accessibility. Meta Pool also aims to distribute staking in multiple validators to improve censorship-resistance of the NEAR network.
With a TVL of ~9+ Million $NEAR and growing, Meta Pool has become in just a few months a cornerstone element of the NEAR ecosystem, making it more decentralized and therefore more secure, as well as making $NEAR liquid.
In February 2022 Meta Pool has been successfully audited by BlockSec, confirming the implementation of the highest security standards.
For more information visit https://metapool.app.
