# 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 **FAX** and **USDT** into a liquidity pool, you would receive **FAX-USDT LP** tokens.

The number of LP tokens you receive represents your portion of the FAX-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.&#x20;

> For example, whenever someone trades FAX, the trader pays a 0.3% fee, of which 0.15% is added to the liquidity pool of the swap pair they traded on.
