Polars: How Much Liquidity Providers Can Earn (Calculator)
In the previous article, we found out why we can guarantee the basic trading volume on the platform, even if users do not bet. We concluded that being a liquidity provider in the Trade Pool is extremely beneficial as you get guaranteed returns due to the underlying guaranteed trading volume.
We have created a profitability calculator for liquidity providers and in this article we will show you how to calculate potential profitability with this calculator. Let’s Go!
Predicrion Pool & Trade Pool
Polars Prediction Pool is a unique pool where you can buy, sell and swap polar tokens WHITE and BLACK at fixed prices with no slippage. This pool has unlimited liquidity. The user buys any number of polar tokens for BUSD, and can return them back. The price of polar tokens is influenced by the results of external events. After the end of each event, the prices of polar tokens change, and immediately during the event, the Prediction Pool is inactive. If the user wishes to make transactions with polar tokens during the event, he can do this in the Trade Pool at any time.
Polars Trade Pool is a full-fledged fork of the Balancer pool, in which a user can exchange several tokens with each other at once. On the Polars platform, we mean 2 tokens: WHITE and BLACK. The price of each of the tokens is determined by the ratio of their quantity in the pool to each other. In order for users of the platform to be able to swap these tokens in the Trade Pool, liquidity providers must provide liquidity to this pool. This means that the liquidity provider needs to add WHITE and BLACK tokens at the same time in a certain ratio, which is now relevant for the Trade Pool. In return for the provided liquidity, the liquidity provider will receive a PTPT token (Polars Trade Pool Token), which will reflect the weight of the liquidity provided to them in the pool. In order to return liquidity from the Trade Pool back, the liquidity provider will need to return the PTPT token to the Trade Pool. Before adding liquidity to the Trade Pool, the user needs to buy WHITE and BLACK tokens from the Betting Pool. After that, the user can add the liquidity of the WHITE and BLACK tokens to the Trade Pool.
Example
Polar Token Price in Betting Pool:
WHITE — $0.57104
BLACK — $0.46495
Suppose you have 1000 BUSD and would like to add them as liquidity to the Trade Pool. You will need to add 2 tokens at once: WHITE and BLACK. Therefore, for 1/2 of the available 1000 BUSD (500 BUSD each), you need to buy WHITE and BLACK tokens in the desired ratio.
Current token ratio when adding 1000 BUSD (500 BUSD each) to the Trade Pool:
872 WHITE
1072 BLACK.
This means that we need to buy from Prediction Pool 872 WHITE for ~ 500 BUSD, and 1080 BLACK for ~ 500 BUSD. After purchasing tokens from the Prediction Pool, we can add liquidity to the Trade Pool in the desired ratio and become a liquidity provider.
Earnings for the liquidity provider
Once your liquidity has been added, traders, betters and arbitrageurs can trade with your liquidity in the Trade Pool. Users will pay 0.3% commission for each completed transaction. 70% of the paid commission will be received by the liquidity provider, and the remaining 30% will be used to buy POL tokens from the market and distribute the purchased tokens among advanced users. Additionally, the liquidity provider receives a reward in POL tokens in the form of pharming for providing its liquidity to the pool and being active on the platform in this way. The larger the trading volume, the more users will pay the commission, the more the liquidity provider will earn.
We have developed a simple profitability calculator, in which you just need to enter 3 indicators to calculate the efficiency of liquidity provision in Polars Trade Pool:
- Total trade volume in Trade Pool for a month
- Total volume of added liquidity in the Trade Pool
- The amount of your added liquidity.
When you insert your indicators, the calculator will automatically calculate your profitability for that month. Calculator link: https://docs.google.com/spreadsheets/d/1cObYeoJ9pfcYjx73dDvS6I2n9x0KczqXvXoG6YdxCS4/edit?usp=sharing
Example
First, make a copy of the calculator for yourself so that you can edit it and paste your data into the yellow cells.
Next, fill in the yellow cells sequentially with data. Let’s start with the total trade volume in the Trade Pool for the month. Let’s assume that the trading volume was $ 6M per month:
Next, insert the average liquidity of the Trade Pool. Let’s assume it’s $ 200k:
Next, you need to enter data on how much liquidity you have added. Let’s say we added $ 10,000:
The data has been added. Now you can see the specific results. We see in the calculator that in total users have paid $ 18,000 in commissions, of which $ 12,600 will be received by liquidity providers. Your share of the pool is 5% of the total amount of added liquidity, so specifically, you will receive $ 630, which with the current parameters is 75.6% APY (excluding farm income):
Please note that in addition to the basic earnings, the liquidity provider receives a reward in POL (as part of the liquidity farming program). You can see this data on the last line. In this case, the liquidity provider will receive an additional 30 POL.
Now you can insert any data in the yellow cells and predict your potential profitability from the activity of the liquidity provider in the Trade Pool. We wish you every success. Thanks for your support.
Polars
The new DeFi platform for creating secure polar tokens, the price of which depends on the results of specific external events. Within the POLARS platform, users can buy, sell and exchange polar tokens, as well as participate in the distribution of the platform’s commission income.
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