# Liquidity pools

The [PokéMoon Exchange](https://exchange.pokemoon.app) allows you to provide liquidity by adding your tokens to the smart contract in return for Liquidity Provider tokens, or LPs.

When you add liquidity or create a pool on the PokéMoon platform, you receive PokéMoon LPs in return that represent your share of the pool. You can then use the LP tokens to participate in PokéMoon [Gyms](https://pokemoon.gitbook.io/pokemoon/yield-farming/gyms) and come back to the exchange whenever you want to remove your liquidity to receive your share of the pool back.

Providing liquidity is not without [risk](https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22) and there are many resources available to help explain the phenomenon. Use your favorite search engine and look for ["Impermanent Loss"](https://bfy.tw/QYe9).&#x20;

However, functions are in place to mitigate some of this risk and reward those helping to maintain a healthy market environment. Whenever someone trades a pair on the PokéMoon Exchange, 0.17% of the trade is added to the liquidity pool of the pair they are trading.

**For example:**

* There are 10 PokéMoon LPs tokens representing 10 MNT and 10 BNB tokens.
* 1 LP token = 1 MNT + 1 BNB
* 10 MNT is traded for 10 BNB.
* 10 BNB is traded for 10 MNT.
* The MNT/BNB liquidity pool now has 10.017 MNT and 10.017 BNB.
* Each LP token is now worth 1.00017 MNT + 1.00017 BNB.

You earn these fees even while your LP tokens are staked in the [PokéMoon Gym](https://pokemoon.gitbook.io/pokemoon/yield-farming/gyms) for double rewards!
