# Liquidity Pools

GalaxyDefi pools allow you to provide liquidity by adding your tokens to liquidity pools.

When you add your token to a liquidity pool you will receive Liquidity Pool (LP) tokens.

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

The number of LP tokens you receive represents your portion of the GLX-BNB 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.\
[“Simply put, impermanent loss is the difference between holding tokens in an AMM and holding them in your wallet.” - Nate Hindman](https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22)

It’s not all bad for liquidity providers as you will also be given a reward in the form of trading fees. Whenever someone trades GalaxyDefi , the trader pays a 0.2% 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 GLX and 10 BNB tokens.
* 1 LP token = 1 GLX + 1 BNB
* Someone trades 10 GLX for 10 BNB.
* Someone else trades 10 BNB for 10 GLX.
* The GLX/BNB liquidity pool now has 10.017 GLX and 10.017 BNB.
* Each LP token is now worth 1.00017 GLX + 1.00017 BNB.

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 [CAKE farms (here)](https://pancakeswap.finance/), while still earning your 0.17% trading fee reward.