Providing Liquidity & Farming
Floor Indexes are the first NFT financial primitive to offer passive income opportunities on exposure to NFTs. With Floor Indexes, you can use Floor Index tokens to provide liquidity to the token trading pool and in some pools, earning farming rewards.

Liquidity Pools

All Floor Indexes have an Liquidity Provision pool. Providing liquidity" refers to the act of adding liquidity for both sides of a trading pair to a pool to enable others to trade between the pair using the AMM.
When you add to a pool you receive Liquidity Provider tokens (LP tokens). For example, if a user desposits $DGNZ (Boryoku Dragonz Floor Index) and $SOL into a pool, he receives DGNZ-SOL LP tokens.
These tokens represent a proportional share of the pooled assets, allowing a user to reclaim their funds at any point.
Every time a user swaps between $DGNZ and $SOL, a 0.25% fee is taken on the trade. 0.22% of that trade goes back to the LP pool (rewarding the liquidity providers) and 0.03% of that goes to support Raydium's infrastructure.
  • If there were 100 LP tokens representing 100 DGNZ and 100 SOL, each token would be worth 1 DAOJONES & 1 SOL.
  • If one user trades 10 DGNZ for 10 SOL, and another traded 10 DGNZ for 10 SOL, then there would now be 100.022 DGNZ and 100.022 SOL.
  • This means each LP token would be worth 1.00022 DGNZ and 1.00022 SOL now when it is now withdrawn.
Providing liquidity to any pool carries the risk of impermanent loss. If you are unfamiliar with the concept of impermanent loss, reviewing this article for a basic understanding is highly recommended.

Farms

Some pools have farms set up which provide additional rewards for being a liquidity provider. Collections may set up a farm for their Floor Index to further incentivize early liquidity providers.
To earn farming rewards, the pool must have an active farm set up. Farming rewards can be in any token (i.e. $SOL, $BOKU) and can be distributed in many different ways. For example, a farm can distribute $1,000 in BOKU to all LPs proportionally over one week. Additionally, a farm can distribute $500 in BOKU over Week 1, $400 BOKU over Week 2, and $300 BOKU over Week 3.
If the pool has an active farm, you can stake your LP tokens to earn the rewards. The rewards are distributed continuously and proportionally to your contribution to the staked LP. Rewards must be claimed from the index page and can be claimed whenever.
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Outline
Liquidity Pools
Farms