Hey there, crypto enthusiasts! If you’ve been scrolling through X lately, you might have stumbled upon an intriguing question posed by hawk | HawkFi 🦀🐍☀️ (@AND__SO) on July 28, 2025: “What if LPs could earn money from the position's inherent trades, and the fees just become an added bonus?” This single tweet has sparked curiosity among the DeFi community, and today, we’re diving deep into what this could mean for liquidity providers (LPs) and the broader blockchain world. Let’s break it down!

What Are Liquidity Providers, Anyway?

If you’re new to the crypto scene, let’s start with the basics. Liquidity providers are the unsung heroes of decentralized finance (DeFi). They deposit their crypto assets into liquidity pools, which are smart contracts that power decentralized exchanges (DEXs) like Uniswap or PancakeSwap. These pools ensure there’s always enough cryptocurrency available for traders to swap tokens without needing a middleman. In return, LPs traditionally earn a share of the transaction fees generated by trades—pretty cool, right?

The Current LP Model: Fees Are King

Right now, the main way LPs make money is through those transaction fees. For example, if someone trades on a DEX, a small percentage (usually 0.3% on platforms like Uniswap) goes to the LPs. It’s a passive income stream, often compared to earning “tips” for keeping the trading game running smoothly, as explained in this guide to earning through liquidity pools. But what if there’s more to the story?

The Game-Changing Idea: Earning from Inherent Trades

The tweet from @AND__SO suggests a twist: what if LPs could earn directly from the inherent trades within their positions, with fees as an extra perk? Let’s unpack this. Inherent trades refer to the natural buying and selling activity that happens as part of maintaining the pool’s balance—think of it as the ebb and flow of tokens as prices shift. Currently, LPs don’t profit from this activity beyond fees; they might even lose value due to impermanent loss, a risk where the value of their deposited assets changes compared to holding them outside the pool.

Imagine if the smart contracts could be tweaked to reward LPs based on the volume or profitability of these inherent trades. This could turn liquidity provision into a more dynamic income source, potentially offsetting losses and attracting more participants to DeFi platforms. It’s a bold idea that could redefine how we think about yield farming!

Why This Matters for the Meme Token World

At Meme Insider, we’re all about keeping you in the loop on how trends like this could impact meme tokens—those quirky, community-driven cryptocurrencies that often thrive on DEXs. If LPs start earning more from inherent trades, it could boost liquidity for smaller tokens, including meme coins, making them easier to trade and potentially increasing their popularity. More liquidity could mean more memes hitting the moon!

The Community’s Reaction

The tweet didn’t go unnoticed! Replies like chiftine(✸,✸) 🔌 ⚡ HUDL’s “Tell me more :o” and callmemorganfreeman’s “Wadyu mean? I’m not caffeinated enough to understand yet” show the community is intrigued but hungry for details. Even beeshal @_brizal hinted at “non-toxic order flow”, nodding to strategies that might protect LPs from losing out to savvy traders (a concept explored in Deribit Insights).

Challenges and Opportunities Ahead

This idea isn’t without hurdles. Rewarding LPs for inherent trades would require complex smart contract upgrades and might need to address issues like toxic flow, where sharp traders exploit LPs. But the potential upside? A more sustainable DeFi ecosystem where LPs feel fairly compensated, possibly drawing in new players and boosting the entire blockchain space.

What’s Next?

We’re keeping our ears to the ground at Meme Insider. Will projects like HawkFi (mentioned in the thread) pioneer this model? Could it lead to a new wave of meme token liquidity? Share your thoughts in the comments, and stay tuned for more updates as this story develops. For now, this tweet has planted a seed—let’s see how it grows in the wild world of DeFi!