Earning Rewards
Fees, Rewards, And In-Range Farming
One of the main motivations to provide liquidity is to earn trading fees and any additional incentives. Pangolin V3 offers multiple layers of earnings for LPs:
Trading Fees
As covered, whenever traders swap through your liquidity range, you earn fees. These fees accrue in real-time to your position. The fee rate is dynamic, but you get your share of whatever fees are taken from trades. Over time, as volume flows through your range, you’ll see your position accumulate more of each token. You can claim these by withdrawing as noted.
The effective fee APR (annualized percentage yield from fees) will depend on trading volume and your range width – narrower, well-utilized ranges can earn very high APRs, whereas very wide ranges earn less (similar to v2). Pangolin V3’s dynamic fee means in volatile times the APR might spike (higher fees), helping offset impermanent loss.
Liquidity Mining Rewards (Superpools)
Pangolin often runs liquidity mining programs to distribute PNG tokens (and sometimes AVAX and also partner project tokens) to LPs of specific pools. In Pangolin V3, this takes the form of Superpools, where a pool can offer additional rewards to LPs. Rewards are typically distributed per second and can be claimed periodically. Pangolin V3’s farm rewards often require your liquidity to be in range to qualify (this is the essence of “in-range farming”).
This means if your position goes out of the incentivized range, it may pause earning extra bonus rewards until it’s back in range, ensuring that only active liquidity is rewarded. Always check the farm details: the UI will indicate the current APR from rewards and any conditions. With Superpools, some pools may even give two types of tokens as reward (e.g., PNG + AVAX or another token), greatly boosting the yield.
Compound Your Earnings
Over time, you might want to compound your earnings for maximum yield. This could mean claiming your earned PNG (and other tokens) and either staking the PNG in Pangolin’s PNG staking (for governance or more rewards) or swapping those rewards to add more liquidity to your position. Compounding fees can be done by simply reinvesting – for example, use the accumulated fees (which are in the pool tokens) to add to your position, increasing your liquidity and therefore future fee earnings. Be mindful of gas costs when compounding, but on Avalanche they are relatively low.