{"id":4385,"date":"2022-06-18T18:06:52","date_gmt":"2022-06-18T11:06:52","guid":{"rendered":"https:\/\/wikibinance.com\/?p=3827"},"modified":"2022-12-14T11:37:18","modified_gmt":"2022-12-14T04:37:18","slug":"binance-liquidity-farming-2","status":"publish","type":"post","link":"https:\/\/wikibinance.com\/en\/basic-binance\/binance-liquidity-farming-2.html","title":{"rendered":"What is Binance Liquidity Farming? Profit calculation formula"},"content":{"rendered":"<h2>What is Binance Liquidity Farming?<\/h2>\n<p><strong><a href=\"http:\/\/ecoinomic.io\/en\/knowledge\/guide\/binance-sign-up-simple-guide.html\" target=\"_blank\" rel=\"noopener\">Binance<\/a> Liquidity Farming<\/strong> is the deposit of coins into a <a href=\"https:\/\/ecoinomic.io\/en\/knowledge\/terms\/liquidity-pool.html\" target=\"_blank\" rel=\"noopener\">liquidity pool<\/a>. Through <a href=\"https:\/\/ecoinomic.io\/en\/knowledge\/decentralized-exchanges-dex.html\" target=\"_blank\" rel=\"noopener\">decentralized exchanges<\/a>, senders receive the reward from trading fees on the exchange.<\/p>\n<div class=\"css-vkkztj\">Like all DeFi swaps, Liquidity Farming consists of various liquidity pools and each of which contains two digital tokens or fiat assets.<\/div>\n<div class=\"css-vkkztj\">You can become a liquidity provider by providing liquidity in pools and earn trading fees as well as flexible interest. In addition, you can easily swap two digital tokens or fiat assets in liquidity pools.<\/div>\n<div><a href=\"https:\/\/wikibinance.com\/en\/basic-binance\/binance-exchange.html\">Binance exchange<\/a> offers the Binance Liquid Swap service, which makes it possible for users to trade coins instantly. You deposit funds into the liquidity pool, traders trade and you get the reward of trading fees from there.<\/div>\n<figure id=\"attachment_6182\" aria-describedby=\"caption-attachment-6182\" style=\"width: 750px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\"size-jnews-750x375 wp-image-6182\" src=\"https:\/\/wikibinance.com\/wp-content\/uploads\/2022\/06\/Binance-Liquidity-Farming-offers-the-Liquid-Swap-service-750x375.png\" alt=\"Binance Liquidity Farming offers the Liquid Swap service\" width=\"750\" height=\"375\" srcset=\"https:\/\/wikibinance.com\/wp-content\/uploads\/2022\/06\/Binance-Liquidity-Farming-offers-the-Liquid-Swap-service-750x375.png 750w, https:\/\/wikibinance.com\/wp-content\/uploads\/2022\/06\/Binance-Liquidity-Farming-offers-the-Liquid-Swap-service-360x180.png 360w, https:\/\/wikibinance.com\/wp-content\/uploads\/2022\/06\/Binance-Liquidity-Farming-offers-the-Liquid-Swap-service-1140x570.png 1140w\" sizes=\"(max-width: 750px) 100vw, 750px\" \/><figcaption id=\"caption-attachment-6182\" class=\"wp-caption-text\">Binance Liquidity Farming offers the Liquid Swap service<\/figcaption><\/figure>\n<h3 class=\"css-gfs0hc\">What kind of products does Binance Liquidity Farming support?<\/h3>\n<p><strong>Liquidity Farming<\/strong> has two types of products: Stable and Innovative.<\/p>\n<p>Stable makes transaction and valuates between two stable, peer-to-peer tokens while providing a trading experience with a low slippage. Innovative is based on a system model that generates an automatic market with a constant mean value for two digital tokens to make transactions and pricing.<\/p>\n<p><span class=\" jss1877 jss2004\"><span id=\"editable-content-within-article~3~0~0\" class=\"jss1879 jss2005\">Exchange\u00a0<\/span><span id=\"editable-content-within-article~3~0~1\" class=\"jss1879 jss2006\">rate\/token\u00a0<\/span><\/span><span class=\" jss1877 jss2007\"><span id=\"editable-content-within-article~3~1~0\" class=\"jss1879 jss2008\">price\u00a0<\/span><span id=\"editable-content-within-article~3~1~1\" class=\"jss1879 jss2009\">fluctuations\u00a0<\/span><\/span><span class=\" jss1877 jss2010\"><span id=\"editable-content-within-article~3~2~0\" class=\"jss1879 jss2011\">affect\u00a0<\/span><span id=\"editable-content-within-article~3~2~1\" class=\"jss1879 jss2012\">the\u00a0<\/span><span id=\"editable-content-within-article~3~2~2\" class=\"jss1879 jss2013\">prices\u00a0<\/span><\/span><span class=\" jss1877 jss2014\"><span id=\"editable-content-within-article~3~3~0\" class=\"jss1879 jss2015\">of\u00a0<\/span><span id=\"editable-content-within-article~3~3~1\" class=\"jss1879 jss2016\">the\u00a0<\/span><\/span><span class=\" jss1877 jss2017\"><span id=\"editable-content-within-article~3~4~0\" class=\"jss1879 jss2018\">two <\/span><\/span><span class=\" jss1877 jss2019\"><span id=\"editable-content-within-article~3~5~0\" class=\"jss1879 jss2020\">tokens\u00a0<\/span><\/span><span class=\" jss1877 jss2021\"><span id=\"editable-content-within-article~3~6~0\" class=\"jss1879 jss2022\">in\u00a0<\/span><span id=\"editable-content-within-article~3~6~1\" class=\"jss1879 jss2023\">the\u00a0<\/span><\/span><span class=\" jss1877 jss2024\"><span id=\"editable-content-within-article~3~7~0\" class=\"jss1879 jss2025\">pool<\/span><\/span>. Meanwhile, the rewards for liquidity providers of Innovative fluctuate more than Stable.<\/p>\n<h3>Terms of Binance Liquidity Farming<\/h3>\n<ul>\n<li>Current pool size: The pair&#8217;s composition in the current pool. When adding assets, you will also add at this proportion.<\/li>\n<li>Add: Provides liquidity for the liquidity pool.<\/li>\n<li>Remove: Withdraw tokens from the liquidity pool.<\/li>\n<li>Price: The swap price between the tokens of the pair traded in the pool. The final price is determined by a formula based on the proportion of the trading pair in the liquidity pool.<\/li>\n<li>Portion: The expected part you&#8217;ll get in the pool after adding liquidity.<\/li>\n<li>Portion of the pool: The expected share you&#8217;ll get in the pool after adding liquidity.<\/li>\n<li>Slippage: The estimated percentage by which the swap&#8217;s final executed price differs from\u00a0the current price because of the trading amount.<\/li>\n<li>Total yield: The estimated annual yield that users can receive when providing liquidity.<\/li>\n<li>My Portion: When you contribute\u00a0liquidity to the liquidity pool, a portion you receive will be different from the single token you add. The portion consists of two digital tokens. <span class=\" jss2509 jss2577\"><span id=\"editable-content-within-article~2~0~0\" class=\"jss2511 jss2578\">Based\u00a0<\/span><span id=\"editable-content-within-article~2~0~1\" class=\"jss2511 jss2579\">on\u00a0<\/span><span id=\"editable-content-within-article~2~0~2\" class=\"jss2511 jss2580\">the\u00a0<\/span><span id=\"editable-content-within-article~2~0~3\" class=\"jss2511 jss2581\">current\u00a0<\/span><\/span><span class=\" jss2509 jss2582\"><span id=\"editable-content-within-article~2~1~0\" class=\"jss2511 jss2583\">pool\u00a0<\/span><span id=\"editable-content-within-article~2~1~1\" class=\"jss2511 jss2584\">size,\u00a0<\/span><\/span><span class=\" jss2509 jss2585\"><span id=\"editable-content-within-article~2~2~0\" class=\"jss2511 jss2586\">the\u00a0<\/span><\/span><span class=\" jss2509 jss2587\"><span id=\"editable-content-within-article~2~3~0\" class=\"jss2511 jss2588\">amount\u00a0<\/span><\/span><span class=\" jss2509 jss2589\"><span id=\"editable-content-within-article~2~4~0\" class=\"jss2511 jss2590\">of\u00a0<\/span><span id=\"editable-content-within-article~2~4~1\" class=\"jss2511 jss2591\">the\u00a0<\/span><\/span><span class=\" jss2509 jss2592\"><span id=\"editable-content-within-article~2~5~0\" class=\"jss2511 jss2593\">two\u00a0<\/span><\/span><span class=\" jss2509 jss2594\"><span id=\"editable-content-within-article~2~6~0\" class=\"jss2511 jss2595\">digital\u00a0<\/span><span id=\"editable-content-within-article~2~6~1\" class=\"jss2511 jss2596\">tokens\u00a0<\/span><\/span><span class=\" jss2509 jss2597\"><span id=\"editable-content-within-article~2~7~0\" class=\"jss2511 jss2598\">will\u00a0<\/span><\/span><span class=\" jss2509 jss2599\"><span id=\"editable-content-within-article~2~8~0\" class=\"jss2511 jss2600\">vary\u00a0<\/span><\/span><span class=\" jss2509 jss2601\"><span id=\"editable-content-within-article~2~9~0\" class=\"jss2511 jss2602\">in\u00a0<\/span><\/span><span class=\" jss2509 jss2603\"><span id=\"editable-content-within-article~2~10~0\" class=\"jss2511 jss2604\">real-time.<\/span><\/span><\/li>\n<li>Total Yield: The latest reference rate of return for the trading pair.<\/li>\n<li>Portion amount: The number of tokens in acquired portion.<\/li>\n<li>Portion value: The total value of the portion acquired after assets have been added.<\/li>\n<li>Pool Portion Composition: Your current component portion. Based on the current pool size, the amount of the two tokens will vary in real-time.<\/li>\n<li>Cost per Portion: Denominated in USD, based on the cost per portion when liquidity is added.<\/li>\n<li>Portion Value PNL: Calculated by the current portion value minus the total cost of the portion, denominated in USD.\u00a0 A variety of factors affect\u00a0portion value, including exchange rates, token price fluctuations, and impermanent losses, which can result in positive or negative returns.<\/li>\n<li><span style=\"font-weight: 400;\">Earnings: Includes income from <strong>Liquidity Farming<\/strong> fees and liquidity rewards, calculated in USD.<\/span><\/li>\n<\/ul>\n<h3>Profit calculation formula<\/h3>\n<h4>Total yield<\/h4>\n<p><span style=\"font-weight: 400;\">Total yield= 365* (rewards allocated in the last 24 hours + transaction fee rewards in the last 24 hours) \/ total pool value in the last 24 hours<\/span><\/p>\n<h4>Portion value<\/h4>\n<ul>\n<li><span style=\"font-weight: 400;\">Portion value = The number of two tokens in the portion composition * real-time exchange rates, calculated in USD.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Example:<\/span><\/li>\n<\/ul>\n<p><span style=\"font-weight: 400;\">User portion value = 100 USDT + 50 DAI<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Real-time exchange rate: 1 USDT = 1,005 USD;<\/span><\/p>\n<p><span style=\"font-weight: 400;\">1 DAI = 1.01 USD<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Portion value = 100 USDT * 1,005 + 50 DAI * 1.01 = 151 USD<\/span><\/p>\n<h3>Is Binance Liquidity Farming a guaranteed investment?<\/h3>\n<p><span style=\"font-weight: 400;\">Binance Liquidity Farming is not a guaranteed investment. The cause of the loss is:<\/span><\/p>\n<ul>\n<li><span style=\"font-weight: 400;\">Fluctuations in token prices, or fiat currency exchange rates, will have an impact on portion value.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Because of excessive slippage, portion value will be affected and lost when a large number of tokens are added or redeemed.<\/span><\/li>\n<li>Frequently adding or redeeming tokens.<\/li>\n<\/ul>\n<p>You can do more research on <a href=\"https:\/\/wikibinance.com\/en\/basic-binance\/binance-earn.html\">less risky products at Binance Earn<\/a><\/p>\n<h3>How to add or remove liquidity?<\/h3>\n<h4>How to add liquidity<\/h4>\n<ul>\n<li><span style=\"font-weight: 400;\">Add two tokens &#8211; The system will automatically display the number of tokens to add based on the current size of the pool.<\/span><\/li>\n<li><span style=\"font-weight: 400;\">Add a token &#8211;\u00a0Based on the current portion composition ratio in the pool, the system will swap the token you added into the other token of your chosen pair. During the conversion, transaction fees will be incurred, and large transactions may result in increased slippage and loss.<\/span><\/li>\n<\/ul>\n<h4>How to remove liquidity<\/h4>\n<ul>\n<li>Remove two tokens: The system will return the two tokens to your Spot Wallet based on the pool portion and composition.<\/li>\n<li><span style=\"font-weight: 400;\">Withdraw a token. &#8211; Based on the current portion composition ratio in the pool, the system will swap the token you added into the other token of your chosen pair. During the conversion, transaction fees will be incurred, and large transactions may result in increased slippage and loss. When the slippage becomes too great, the system sends an alert on the page.<\/span><\/li>\n<\/ul>\n<h3>How to add Binance Liquidity Farming<\/h3>\n<blockquote><p><em>Related: <a href=\"https:\/\/wikibinance.com\/en\/basic-binance\/binance-sign-up.html\">Binance Registration Guide update 2022<\/a><\/em><\/p><\/blockquote>\n<p>Step 1: On the home page of the Binance app, click <em>[Earn]<\/em>, select <em>[Liquidity Farming]<\/em><\/p>\n<p><figure id=\"attachment_3848\" aria-describedby=\"caption-attachment-3848\" style=\"width: 485px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\"wp-image-3848 \" src=\"https:\/\/wikibinance.com\/wp-content\/uploads\/2022\/06\/Chon-Liquidity-Farming.png\" alt=\"Click [Earn], select [Liquidity Farming]\" width=\"485\" height=\"418\" \/><figcaption id=\"caption-attachment-3848\" class=\"wp-caption-text\">Click [Earn], select [Liquidity Farming]<\/figcaption><\/figure>Step 2: On the <em>Liquidity<\/em> box, select the liquidity pool you want, and select the type of pool (two or one token).<\/p>\n<div class=\"css-vkkztj\">If you choose to add liquidity to the two-token pool, enter the amount for the first token, then the system will automatically display the amount needed for the second token.<\/div>\n<div>\n<figure id=\"attachment_3851\" aria-describedby=\"caption-attachment-3851\" style=\"width: 478px\" class=\"wp-caption aligncenter\"><img decoding=\"async\" loading=\"lazy\" class=\"wp-image-3851 \" src=\"https:\/\/wikibinance.com\/wp-content\/uploads\/2022\/06\/cach-them-liquidity-farming-cua-binance.png\" alt=\"Select the type of pool and enter the amount\" width=\"478\" height=\"412\" \/><figcaption id=\"caption-attachment-3851\" class=\"wp-caption-text\">Select the type of pool and enter the amount<\/figcaption><\/figure>\n<\/div>\n\n\n<div class=\"kk-star-ratings kksr-auto kksr-align-center kksr-valign-bottom\"\n    data-payload=\"{&quot;align&quot;:&quot;center&quot;,&quot;id&quot;:&quot;4385&quot;,&quot;slug&quot;:&quot;default&quot;,&quot;valign&quot;:&quot;bottom&quot;,&quot;ignore&quot;:&quot;&quot;,&quot;reference&quot;:&quot;auto&quot;,&quot;class&quot;:&quot;&quot;,&quot;count&quot;:&quot;0&quot;,&quot;readonly&quot;:&quot;&quot;,&quot;score&quot;:&quot;0&quot;,&quot;best&quot;:&quot;5&quot;,&quot;gap&quot;:&quot;5&quot;,&quot;greet&quot;:&quot;Rate this post&quot;,&quot;legend&quot;:&quot;0\\\/5 - (0 votes)&quot;,&quot;size&quot;:&quot;24&quot;,&quot;width&quot;:&quot;0&quot;,&quot;_legend&quot;:&quot;{score}\\\/{best} - ({count} {votes})&quot;,&quot;font_factor&quot;:&quot;1.25&quot;}\">\n    \n<div class=\"kksr-stars\">\n    \n<div class=\"kksr-stars-inactive\">\n            <div class=\"kksr-star\" data-star=\"1\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" data-star=\"2\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" data-star=\"3\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" data-star=\"4\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" data-star=\"5\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n    <\/div>\n    \n<div class=\"kksr-stars-active\" style=\"width: 0px;\">\n            <div class=\"kksr-star\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n            <div class=\"kksr-star\" style=\"padding-right: 5px\">\n            \n\n<div class=\"kksr-icon\" style=\"width: 24px; height: 24px;\"><\/div>\n        <\/div>\n    <\/div>\n<\/div>\n    \n\n<div class=\"kksr-legend\" style=\"font-size: 19.2px;\">\n            <span class=\"kksr-muted\">Rate this post<\/span>\n    <\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>What is Binance Liquidity Farming? Binance Liquidity Farming is the deposit of coins into a liquidity pool. Through decentralized exchanges, senders receive the reward from trading fees on the exchange. Like all DeFi swaps, Liquidity Farming consists of various liquidity pools and each of which contains two digital tokens or fiat assets. You can become [&hellip;]<\/p>\n","protected":false},"author":28,"featured_media":8651,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[390],"tags":[1628,2403],"_links":{"self":[{"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/posts\/4385"}],"collection":[{"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/users\/28"}],"replies":[{"embeddable":true,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/comments?post=4385"}],"version-history":[{"count":11,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/posts\/4385\/revisions"}],"predecessor-version":[{"id":89364,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/posts\/4385\/revisions\/89364"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/media\/8651"}],"wp:attachment":[{"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/media?parent=4385"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/categories?post=4385"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/wikibinance.com\/en\/wp-json\/wp\/v2\/tags?post=4385"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}