Liquidity
How to Provide Liquidity
Liquidity provision on Zohal is facilitated through ZM Pools, offering rewards from trading fees, borrowing fees.
ZM Pools Overview
ZM (Zohal Market) Pools enable liquidity provision for specific trading pairs. Each pool is structured as follows:
- Index Price Feed: Guides long and short token positions based on real-time market data.
- Long Token: Asset backing long positions.
- Short Token: Asset backing short positions.
Example:
- Market: STRK/USD [STRK-USDC]
- Index Price Feed: STRK/USD
- Long Token: STRK
- Short Token: USDC
For single-token pools, both long and short positions utilize the same token.
Managing ZM Tokens
Buying ZM Tokens
Purchase ZM tokens directly from Zohal's platform using the following steps:
- Select your preferred market and pool.
- Review the price impact, which reflects changes in pool balances.
- Confirm and complete the transaction using the recommended token pair for the best price.
Note: Transaction fees are paid in STRK or ETH.
Selling ZM Tokens
Sell ZM tokens through the "Earn" page on Zohal's platform. Liquidity is subject to the pool's reserves and current open interest caps.
Token Pricing
ZM token prices are influenced by:
- Market prices of the underlying long and short tokens.
- Net pending profit and loss (PnL) from open trading positions.
- Accumulated fees from swaps and leverage trading.
Risks to Consider
Providing liquidity comes with inherent risks, including:
- Smart Contract Vulnerabilities: Potential flaws in the platform's code.
- Counterparty Risks: Losses incurred when traders profit significantly.
- Token Risks: Issues such as depegging or vulnerabilities in bridged/pegged tokens.
Although measures are in place to reduce these risks, users should approach liquidity provision with care.