# Liquidity Pools

By participating in **liquidity pools**, you have the opportunity to contribute your tokens and provide liquidity. When you add your tokens to a liquidity pool, you receive Liquidity Pool (LP) tokens in return.

As an example, if you deposited **FUN** and **USDT** into a liquidity pool, you would receive **FUN-USDT LP** tokens.

The number of LP tokens you receive represents your portion of the FUN-USDT liquidity pool.

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

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

It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. 

> For example, whenever someone trades FUN, the trader pays a 0.35% fee.