LP SBT Rewards

Liquidity providers on SwapBlok earn two independent income streams simultaneously. This two-layer reward structure sets SwapBlok apart from protocols offering either fees or token rewards alone.

Layer 1: Native Taker Fees

Every swap through an AMM pool contributes a taker fee that remains in the pool. This increases the pool's constant k and consequently the redemption value of LP tokens. No action is required from the LP; fees accumulate automatically and are realised at the point of redemption. Taker fee income is denominated in the pool's native assets (wETH, wSOL, wBTC, wUSDT), giving LPs direct exposure to the assets they care about.

Layer 2: SBT Rewards

SBT is distributed to LP token holders from the dedicated 17.5% LP / Staking rewards allocation on a front-loaded declining schedule. Rewards are proportional to each LP's share of the pool and create a continuous SBT yield stream that:

• Does not require the LP to exit their position
• Is claimable at any time without disrupting pool participation
• Supplements the direct pool fee revenue LPs earn natively from trading activity
• Runs on a pre-defined emission schedule independent of fee revenue, providing predictable yield from day one

Total LP Income

Total LP yield
= Native taker fees  (realised on redemption — auto-accumulating)
+ SBT rewards        (claimable continuously — funded from 17.5% emission allocation)

The LP Lifecycle

1.  Bridge assets to SB Chain (e.g. ETH → wETH, SOL → wSOL)
2.  Deposit wETH + wSOL in equal value into the ETH-SOL pool
3.  Receive ETH-SOL-LP tokens representing your pool share
4.  [Position is active]
    ├── Native taker fees accumulate in pool continuously
    └── SBT rewards accrue — claimable at any time
5.  Optionally claim SBT rewards without exiting your position
6.  When ready to exit: redeem ETH-SOL-LP tokens
7.  Receive wETH + wSOL + all accumulated taker fees
8.  Bridge out: wETH → ETH on Ethereum, wSOL → SOL on Solana

Impermanent Loss

As with all constant product AMM pools, liquidity providers are exposed to impermanent loss: the reduction in value relative to simply holding the deposited assets, caused by price divergence between the two assets in the pool. The "loss" is impermanent because it reverses if the price ratio returns to the entry point. It becomes permanent on exit while prices are diverged.

Whether the LP yield trade-off is favourable depends on fee income and SBT rewards relative to price divergence. Stablecoin pairs (wETH/wUSDT, wBTC/wUSDT) have minimal impermanent loss due to low price divergence between a volatile asset and a stablecoin at low price change magnitudes.