# Farms

## What are liquidity pools (LP)? 

Liquidity pools are essentially **pools of token**s that are **locked by smart contract**. The main **purpose** of these pools are to help **provide liquidity** and **facilitate trading on exchanges**. They do this by giving users of the exchange a means to **buy and sell**.

As such, liquidity pools are used by **Automated Market Markers (AMM)** to **minimize** **drastic price changes** (volatility) on crypto exchanges. This characteristic makes liquidity pools ideal for new coins or tokens that do not have a large user base.

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Please refer to [how-to-earn-slow](https://lo-fi.gitbook.io/docs/lo-fi-guide/how-to-earn-slow "mention") for more information.
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## Generally speaking, what **i**s the easiest flow to follow for compounding rewards?

### **If LOW is OVER the peg (1.01 TWAP):**

1. Buy **LOW** and pair it with **CRO** to provide liquidity **(LOW-CRO LP)** to **earn SLOW Rewards**
2. Divide the **earned SLOW** into **2 parts**: <mark style="color:blue;">**I.**</mark> Sell **50%** of earned **SLOW** for **CRO** and provide **SLOW-CRO LP** in the Farms Page to earn more **SLOW** rewards. <mark style="color:blue;">**II.**</mark> Stake the **50%** of earned SLOW into **Boardroom** to **earn LOW** Rewards.
3. Sell **50%** of earned **LOW** from Boardroom for **CRO** and compound it back into the **LOW-CRO LP** for **SLOW** Rewards.
4. **Repeat** step 2 and 3 and profit!

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**Rationale:**

To provide **stability** for both the **platform** and your **underlying investment**.
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### **If** LOW **is UNDER the peg (0.99 TWAP):**

1. Buy or use the farmed **LOW** in Boardroom and exchange it for **BLOW** in Bonds Page.
2. If you are providing LP (**LOW/SLOW-CRO LP**), burn the LP and exchange both tokens (**LOW/SLOW & CRO**) for **BLOW**.
3. Sell **BLOW** for **LOW** at a **premium rate** once **LOW** is **back above the peg**.

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**Rationale:**

Help to bring **LOW** back above the peg so that Boardroom can resume printing **LOW.**
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## **Higher TVL in the pool = Higher APR?**

**No**, the higher the TVL in the pool, the lower the APR will be as there are more people **sharing** the same piece of the pie.

**BUT**, the **higher** the **price of the rewards** - SLOW (the pie), the **higher the APR** (better quality of pie) will be.

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In other words, although the same rewards are diluted across more investors, if those rewards have a **higher dollar value** because of the **increase in TVL**, then it can actually lead to a **higher APR** as well.
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## APR in Boardroom is higher than in the Farms for LOW-CRO LP. Why would I not just invest everything in Boardroom?

1. Not Comparable due to different Rewards given. **Boardroom** is printing **LOW Rewards**, **LOW-CRO LP** is giving **SLOW Rewards**.
2. The APR shown in the Farms is linear and it prints 24/7 regardless of LOW's relation to the peg. Whereas, Boardroom prints **ONLY** when LOW's TWAP is above 1.1 (above the peg). Therefore, it may not always be that an investor gets a higher return from Boardroom than from the LOW-CRO LP Pool.

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**Note:**

LOW follows the price of CRO, LOW-CRO LP is akin to holding CRO in your wallet, except with the bonus of a high farming APRs on top of it. In other words, if you're bullish on CRO's price action, the LOW-CRO LP is a way of holding exposure to that single asset while also reaping high APRs.
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## How to compound the LP?

1. Deposit your LP tokens in Farms on [Lo-fi](https://www.lo-fi.club/farms).
2. Harvest SLOW that you’ve earned every set amount of minutes.
3. Sell a portion of rewarded SLOW and use the remaining proceeds mint more LOW-CRO or SLOW-CRO LP tokens on [MMF](https://mm.finance/swap).
4. Deposit those LP tokens back into [Lo-fi](https://www.lo-fi.club/farms) to grow your allocation.

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**Note:**

Both LOW-CRO LP and SLOW-CRO LP pools pay rewards in SLOW.

If you’re in the **SLOW-CRO LP**, **50%** of your SLOW rewards are sold for **CRO** each time for compounding.

If you’re in the **LOW-CRO LP**, 100% of your reward is sold and used to purchase **50% LOW** and **50% CRO** for compounding **(create buy pressure on LOW**:arrow\_forward:**increase in LOW demand**:arrow\_forward:**increase in LOW price)**.
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## Why is ‘at-peg’ (TWAP between 1.00 and 1.01) the best time to provide liquidity?

When LOW is pegged or close to being pegged to 1 LOW : 1 CRO, it is more akin to having exposure to a **single asset (single staking) than to your traditional LP'ing experience**, where you would run the **risk of impermanent loss** if one of the tokens went up in value and the other did not.