Liquidity Pool


Liquidity pools on Mero either support ERC20 tokens or ETH. The abstract base contract is the LiquidityPool contract. Depending on the underlying asset, the child contract is either an Erc20Pool contract or an EthPool contract.

Users can deposit the single underlying asset in exchange for pool-specific LP Tokens. LP token holders can redeem their LP tokens for the underlying at any point in time. The LP token appreciates over the underlying as the pool accrues interest and fees over time

Funds are held in part by the pool and by a pool-specific vault, which handles the yield-farming logic by allocating funds to a vault-specific strategy. The pool’s LP token can be staked and used to pay for collateral top ups

Withdrawal Fee

On withdrawals, a linearly decreasing withdrawal fee is enforced, which starts at a MAX_WITHDRAWAL_FEE and decreases linearly over 2 weeks to a MIN_WITHDRAWAL_FEE. The LiquidityPool contract maintains current withdrawal fees for each user, which are updated upon deposit and redeem. Upon deposit, the new fee percentage is calculated as the weighted average of the current balance at the current (linearly decreased) withdrawal fee and the added amount at the MAX_WITHDRAWAL_FEE. Note that actions are exempt from the withdrawal fee, i.e., when an action redeems funds for execution, it is not charged a withdrawal fee.