💰Provision of liquidity
Liquidity provision is one way of generating passive income in which a liquidity provider transfers its assets into a pool, which are used by the protocol to make loans and general
DLP (DAOLama LP Token) is a specialised token designed for liquidity providers on the DAOLama platform. The collected liquidity is used by the protocol to issue loans.
The DLP is a share of the total liquidity managed by a smart contract on a platform called the Vault. The Vault functions as a counterparty between suppliers and borrowers:
Funds for loan disbursement are drawn from the Vault.
The body of the loan, together with interest, is transferred to the Vault.
80% per cent of the protocol income from each loan disbursed is distributed to DLP holders, incentivising them to hold funds in the Vault to generate income.
DLP replenishment
Add your tokens to the liquidity pool on the Storage page. To do this, click ‘Provide’ and enter the required number of tokens. In return, you will receive DLP tokens at the current rate, which can be exchanged back at any time.
DLP combustion
To withdraw, go to the Vault page, click ‘Withdraw’ and enter the number of DLP you want to redeem. The specified number of DLPs will be burned and you will receive your tokens back at the current rate.
Risks
Although the value of DLP is relatively resilient to market fluctuations, holding DLP involves certain risks, particularly during periods of high volatility when the value of collateral assets declines sharply and some borrowers do not redeem their assets, resulting in the liquidation of loans. These risks can lead to a decline in the value of the token. At the same time, the redistribution of 80% of profits to the Vault contributes to the growth of DLP's value in the medium term.
DLP costing
The price of DLP is determined by the volume of TON tokens in the Vault and the current volume of issued DLP. Changes in the issuance or burning of DLP affect the future dynamics of their value, but do not directly affect the current price.
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