When user’s provide liquidity in Ray Dex, they will be given LP token which can be used for earning additional reward.
Ray Dex charges 0.20% fee for all trades, of which 0.15% is added to the liquidity pool of the token pair that was traded on.
In other words, a liquidity pool (LP) is a pool of two tokens, e.g. PLS and RDX tokens. This pool is what allows users to exchange between the two tokens automatically without counter party risk or middlemen.
Users can earn a share of the trading fees by depositing a pair of tokens into the LP (also known as "adding liquidity"). Users will receive an Ray LP token, representing their share of the LP.
When a user adds liquidity to a Pool they accrue yield from the protocol. You earn 0.20% of all trades on this pair proportional to your share of the pool. Fees are added to the pool, accrue in real-time, and can be claimed when you withdraw your Liquidity. Your share of the Trading Fees will be accrued in real-time and will be paid on top of your existing position when you exit the liquidity pool. Providing liquidity is not without risk, as you may be exposed to impermanent loss but if the prices of the two tokens revert back to the same prices when you added liquidity, you won't suffer any impermanent loss.