Provide liquidity to earn passive rewards
First off - the basics:
What is a 'Liquidity Provider'?
A liquidity provider is a user who allocates their capital to a liquidity pool to facilitate trading of an asset or group of assets. Users are incentivized to provide liquidity via rewards, and of course can still benefit from price appreciation of the underlying asset.
What is Farming?
Farming is a broad term in the DeFi crypto space meaning the act of staking or lending funds to recieve rewards.
Providing Liquidity using Zest
Liquidity providers accrue ZSP tokens as a reward for allocating their capital to the protocol.
All rewards earned from being a liquidity provider are subject to an 8-week vesting period; meaning funds are locked for 8 weeks. During the vesting period, your tokens are considered 'staked tokens' and therefore accrue fee revenue.
- Vested ZSP - Can be withdrawn with a 50% penalty at any time, counts as staked ZSP and receives rewards in FTM.
- Locked ZSP - Cannot be withdrawn until 8 weeks after locking (receive penalty rewards from those that choose to claim early)
Early Withdrawal Fee
Users can access their funds at any time during the vesting period. However, withdrawing your rewards during the vesting period will incur a 50% penalty. This penalty is distributed to those that lock their ZSP.