Strategies — AMM/THORChain Continuous LP — FAQ

Q: What is a THORChain Continuous Liquidity Pool?
A Continuous Liquidity Pool (CLP) provides liquidity to THORChain’s native pools, which pair tokens with RUNE using a constant product AMM model (XYK) and a dynamic slip-based fee.

It works similarly to the XYK strategy on Rujira but directly on the THORChain base layer.

You earn yield from:

• Slip-based fees, which increase with trade size
• A share of Rujira’s revenue that is sent to THORChain

Rewards are split between liquidity providers (LPs) and THORChain node operators based on the Incentive Pendulum*.

You can access Continuous LPs here: rujira.network/strategies?filters=ThorchainPool

For more details, visit the Continuous LP docs: https://docs.thorchain.org/technical-documentation/thorchain-finance/continuous-liquidity-pools

*Incentive Pendulum: a system that dynamically balances rewards between THORChain’s liquidity providers and node operators to keep the network healthy.

Q: How can I open a position?
Go to the Strategies page, filter by Continuous LP, choose a pool, enter the amount you want to provide, and sign the transaction.

Q: What is impermanent loss?
Impermanent loss is the difference in value between providing liquidity and simply holding your assets, caused by price movements between the two tokens in the pool.

With THORChain’s Continuous Liquidity Pool (CLP) model, the pool automatically rebalances your assets as prices move to keep the value of each side at 50/50. When one asset increases in price relative to the other, the pool sells some of it into the other asset to keep the pool balanced. Over time, this leaves you with more of the asset that underperformed and less of the one that outperformed.

THORChain reduces the impact of impermanent loss through its fee structure. Swappers pay liquidity fees, and those fees go directly to LPs. When the pool is active and swap volume is high, these fees can offset or even exceed impermanent loss. If prices never return to where they were when you entered, the difference between the LP value and the hold value becomes your impermanent loss.