> For the complete documentation index, see [llms.txt](https://funpump.gitbook.io/funpump/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://funpump.gitbook.io/funpump/pancakeswap-exchange/pancakeswap-pools.md).

# Liquidity Pools

![](/files/kMyLiUfgruefdehmeJbg)

When you add your token to a Liquidity Pool you will receive Liquidity Provider (LP) tokens and share in the fees.

## LP Tokens

As an example, if you deposited HOPE and MATIC into a Liquidity Pool, you'd receive HOPE**-MATIC LP** tokens.

The number of LP tokens you receive represents your portion of the HOPE-MATIC Liquidity Pool.

You can also redeem your funds at any time by removing your liquidity.

![](/files/No8gCjqsU39kPso5xToo)

## Liquidity Providers earn trading fees

Providing liquidity gives you a reward in the form of trading fees when people use your liquidity pool.

Whenever someone trades on HopiumSwap, the trader pays a 0.25% fee, **of which 0.17%** is added to the Liquidity Pool of the swap pair they traded on.

For example:

* There are 10 LP tokens representing 10 HOPE and 10 MATIC tokens.
* 1 LP token = 1 HOPE + 1 MATIC
* Someone trades 10 HOPE for 10 MATIC.
* Someone else trades 10 MATIC for 10 HOPE.
* The HOPE/MATIC liquidity pool now has 10.017 HOPE and 10.017 MATIC.
* Each LP token is now worth 1.00017 HOPE + 1.00017 MATIC.

To make being a liquidity provider even more worth your while, you can also put your LP tokens to work whipping up some fresh yield on the HOPE Farms, while still earning your 0.17% trading fee reward.

## Impermanent Loss

Providing liquidity is not without risk, as you may be exposed to impermanent loss.

\
“Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman


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