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Liquidity providers supply inventory to Hearth so traders can swap XFG↔HEAT with depth.

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What you earn

Hearth charges 1% (HEARTH_FEE_BPS = 100) on trades — paid by the taker (fee-adjusted output), debited from pool reserves into the CD yield accumulator. LPs do not earn the flat fee. LP income is the pool’s own trading P&L:
  • The taker pays the fee-adjusted amount, so the pool retains the fee-adjusted spread on every fill.
  • Reserve appreciation from limit-order execution at the spot price.
  • No separate “spread reward” formula exists anymore (the old |fill.price − P_clear| × amount reward belonged to the retired in-band matcher). Your share is realized on withdrawal via proportional share redemption.
You also do not earn the atomic-swap fee stream (2% = 1% + 1% per swap) unless you hold HEAT CDs or Bonus Vault rights — those are separate. Protocol earnings are exactly two streams: this 1% Hearth fee and the 2% atomic swap fee. Mint premium is 0 bps (goes nowhere); the 0.1% CD creation fee is burned to the Treasury LP Manager, not protocol revenue.

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Deposits

  • Balanced only. A single-sided deposit (XFG alone or HEAT alone) mints no shares — the pool requires ratio-paired deposits at the current pool ratio. No dilution.
  • Shares are minted pro-rata (min(amountA×T/reserveA, amountB×T/reserveB)) — fair shares at the pool ratio.
  • The Treasury LP Manager follows the same rule: it pairs its XFG leg (treasury fee share + donations) with its HEAT leg (mint premiums + HEAT donations) at the pool ratio and deposits only when both legs can be paired; the excess carries to the next epoch.

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Practical notes

  • Prefer dual-sided XFG + HEAT inventory at the current pool ratio.
  • Price moves create impermanent loss relative to holding outside the pool; trading P&L may or may not offset it.
  • Use wallet / daemon RPC for your build (lp_deposit / pool methods if exposed). Exact CLI names vary by version — check --help and API overview.

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Withdraw

Withdrawing burns your LP shares and returns your proportional share of both reserves. Confirm maturity / unlock rules if your position is commitment-tagged (DEPOSIT_TERM_LP in protocol terms).

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See also