> For the complete documentation index, see [llms.txt](https://nitro-finance.gitbook.io/ftl/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://nitro-finance.gitbook.io/ftl/core-interactions/lending-or-liquidity-provisioning.md).

# Lending or Liquidity Provisioning

By participating in the liquidity pool as a liquidity provider (LP), users receive a substantial share of the fees generated from DEX and Money Market interactions. 

## The Liquidity Structures of Fused Trade Ledger

The Fused Trade Ledger provides a flexible framework, allowing LPs to act as:

* **Liquidity Providers** in a Decentralized Exchange (DEX).
* **Lenders** in a Money Market.

As market prices shift, liquidity positions naturally adjust between the following states:

* **Active Liquidity**: Supports trades in the current price bin, earning **swap fees**.
* **Inactive Liquidity**: Becomes accessible to borrowers, generating **borrowing fees**.

This dynamic system ensures LPs consistently earn fees regardless of market conditions or liquidity state.

### **Spot Concentrated Structure**

Liquidity is fully concentrated in the active bin, supporting trades exclusively at the current market price.

* **Purpose**:
  * Maximizes trading fees by focusing liquidity where trading activity is highest.

<figure><img src="/files/xi3pNOjTHWHp448n4pOS" alt=""><figcaption></figcaption></figure>

### **Bid-Ask Structure**

Liquidity is divided across bins above and below the active price, creating two distinct zones:

* **Above the Active Price (Ask)**: Base assets (e.g., NAD) are supplied.
* **Below the Active Price (Bid)**: Quote assets (e.g., USDC) are supplied.
* **Purpose**:
  * Balances trading and borrowing fee opportunities.
  * Allows LPs to capture returns from both market movements and lending activities.

<figure><img src="/files/lV20XNaohn1RzAhE8pRo" alt=""><figcaption></figcaption></figure>

### **Bell-Curved Structure**

Liquidity is distributed across multiple bins, with larger amounts concentrated closer to the active price and smaller amounts allocated further away.

* **Purpose**:
  * Concentrates liquidity where trading activity is highest for optimized returns.
  * Extends coverage to support borrowing in bins further from the active price.

<figure><img src="/files/5iCcpoEDSiMOZ8astnlQ" alt=""><figcaption></figcaption></figure>

### **Wide/Continuum Structure**

Liquidity is evenly distributed across a broad range of bins, regardless of proximity to the active price.

* **Purpose**:
  * Ensures stable exposure to both trading and borrowing fees across a wide price range.
  * Reduces the need for active management.

<figure><img src="/files/kf96sYcc2Mtala5LGmJ3" alt=""><figcaption></figcaption></figure>

### **Ascending/Descending DCA Structure**

Liquidity is placed dynamically, either increasing or decreasing with each bin as it moves further from the active price.

* **Ascending DCA**:
  * **Positioned Above the Active Price**: Base assets (e.g., NAD) are added.
  * As the price rises, the base asset is gradually sold for the quote asset (e.g., USDC), gradual capturing gains.
* **Descending DCA**:
  * **Positioned Below the Active Price**: Quote assets (e.g., USDC) are added.
  * As the price falls, the quote asset is gradually converted to the base asset (e.g., NAD), gradual accumulation of assets.

<figure><img src="/files/3e69EBqADeThzwr6rZ0U" alt=""><figcaption></figcaption></figure>