The much awaited start of farming season in the KuCoin Community Chain begins with KuSwap. Farming starts after block 788562 which can be seen at https://explorer.kcc.io/en/blocklist.
Yield Farming or Liquidity mining is a way for users to provide liquidity on the KuSwap Exchange in return for some KUS tokens. As soon as farming starts, there will be 1 liquidity pair which is the KUS-KCS pair. You can go directly to https://kuswap.finance/#/pool to add liquidity.
The KUS-KCS Liquidity Pool
KUS-KCS liquidity pool is supplied by users who provide a number of KUS tokens and an equal value of KCS. Upon supplying the liquidity, they will then receive liquidity pool (LP) tokens representing their share of the total liquidity pool.
Through the liquidity provided through these pools, other users can buy or sell the token, in exchange of a minimal fee. This fee is distributed to the LP providers in proportion to their ownership of the total pool.
The fees that are distributed to LP providers are automatically added to the value of the LP Tokens that you hold.
To explain this simply, let’s suppose that the value of 1 KCS = 1 KUS.
Then lets assume that there are 10 LP tokens representing 10 KUS and 10 KCS tokens.
1 LP token = 1 KUS + 1 KCS
Let’s say someone trades 10 KUS for 10 KCS. And right afterwards, someone else trades 10 KCS for 10 KUS.
The KUS/KCS liquidity pool now has 10.01 KUS and 10.01 KCS. And each LP token is now worth 1.0001 KCS and 1.0001 KUS. Thus, the fees are automatically added to the worth of your LP Tokens. When you withdraw your LP Tokens, they will be much more valuable.
Note: Please read about impermanent loss to learn about the risk involved in liquidity farming.
3 Ways to Earn
- Earning fees through providing liquidity, as explained in the previous section.
- Depositing your LP Tokens to the farm will get you some KUS Tokens which you can claim.
- Single-staking your KUS tokens.
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As more tokens enter into the KCC ecosystem, there will be more opportunities for KuSwap users to earn through yield farming. Another interesting benefit for KCS-KUS LP holders is that they will be airdropped a small percentage of the tokens crossing the KUSBridge once it goes live.
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