The STON/USDT pool on STONfi looks simple: two tokens, an APR percentage, a button to add liquidity. But under the hood there is a mechanic worth understanding, especially if you are entering a pool not for a day but for months.

Let's start with pricing. The pool works on an automated market maker model. This means the price of tokens inside the pool is not taken from external exchanges but calculated by the constant product formula. Simplified: the amount of STON multiplied by the amount of USDT must always be the same. When someone swaps STON for USDT, they take one from the pool and add the other, changing the proportion. The new proportion becomes the new price.

Next, commissions. Every swap inside the pool is charged a fee distributed among everyone who provided liquidity. Your share depends on what percentage of the pool belongs to you. If you own one percent of all LP tokens in that pool, you get one percent of all fees.

Now about APR. It consists of two parts. The first is commissions from swaps, the second is additional rewards in GEMSTON earned through farming. Commissions depend on trading volumes, GEMSTON on the incentive program. So APR can change even if volumes stay flat.

And finally, impermanent loss. When the price of STON relative to USDT moves in either direction, the dollar equivalent of your share may temporarily differ from what it would be if you simply held the tokens separately. This is not a pure loss but rather an opportunity cost offset by commissions if the pool is active.
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