Liquidity Providers

Liquidity providers are an essential part of the CVI ecosystem since as we mentioned before they play the counterpart for the open positions of CVI, and therefore are rewarded accordingly. This means, if a trader has entered a position on CVI and lost that trade, the liquidity providers are the ones to recoup the lost trade, and vice versa. 
For example, if on the trading platform liquidity providers supply X amount of ETH to the Liquidity Pool (LP). This ETH supplied to the LP enables to mint new CVI positions according to demand by buyers as long as the collateral rule is satisfied. 
Each liquidity provider on the platform shares the ongoing profits from fees according to their share in the Liquidity Pool. In addition to the mentioned rewards, the liquidity providers will also share the distribution of governance tokens. 
A liquidity provider can withdraw funds by selling their LP tokens back to the smart contract according to the current price.
CVI LP tokens are:
ERC-20 tokens.
Redeemable.
Minted when sold and burned when bought back.
The smart contract issues CVI liquidity tokens and sells them to liquidity providers. 
A CVI liquidity token value is defined as the share of one token in the pool. The liquidity pool is adjusted for the gross position gain and loss at each event of changing of positions. 
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