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Providing Liquidity ​

The Pool as Dealer ​

Jetty uses a single shared liquidity pool that acts as the counterparty to every swap trade across every market. When a trader opens a position, they're trading against the pool. When they close, they're trading against the pool again.

As an LP, you deposit into this pool and earn a share of the revenue it generates. You don't need to quote prices, pick markets, or actively manage anything. The protocol handles pricing and risk management automatically.

How Deposits Work ​

You deposit the pool's quote token (e.g., USDC) and receive LP shares in return. These shares are standard SPL tokens that represent your proportional claim on the pool's equity.

The number of shares you receive is based on the pool's current net asset value (NAV) per share at the time of deposit. A small deposit fee applies, which stays in the pool and benefits existing LPs.

What Drives Returns ​

LP returns come from several sources:

  • Swap fees. Every trade pays a dynamic fee. The majority goes to LPs.
  • Streaming fees. Open positions pay a small streaming fee over time. LPs earn their share of this.
  • Spread capture. When traders enter and exit at different rates, the pool captures the difference.
  • Deposit and withdrawal fees. These stay in the pool, increasing NAV per share.

Returns are not "up only." The pool is taking the other side of every trade, which means LPs earn a risk premium but can also face periods of negative PnL when rates move sharply against the pool's aggregate position. Over time, fees and balanced flow are designed to compensate for this directional risk.

How Withdrawals Work ​

To withdraw, you burn your LP shares and receive your proportional share of the pool's equity in the quote token.

The pool tracks how much capital is reserved against open positions. You can only withdraw from the unreserved portion, capital that isn't currently backing active trades. This protects the pool from being drained while positions are outstanding.

A dynamic withdrawal fee applies that scales with how much of the pool's capital is in use. When utilization is low, the fee is small. When utilization is high, the fee increases to discourage exits during periods when the capital is needed most.

Next Steps ​

Jetty Protocol