> ## Documentation Index
> Fetch the complete documentation index at: https://docs-staging.centuari.finance/llms.txt
> Use this file to discover all available pages before exploring further.

# Getting Started as a Liquidity Provider

> Earn spreads by market making on the fixed-rate order book

## Overview

Liquidity providers (LPs) earn by posting both lend and borrow orders, capturing the spread between them. This is similar to market making on traditional exchanges.

## How LP Earning Works

```
LP Strategy:
├── Post LEND order at 7.5% APY
├── Post BORROW order at 8.5% APY
└── Spread: 1.0% (100 basis points)

When both sides match:
  - Lend $100,000 at 7.5% → Receive $7,500/year
  - Borrow $100,000 at 8.5% → Pay $8,500/year
  - Net cost: $1,000/year

Wait, that's negative? Here's the real strategy:
  - Lend $100,000 at 7.5% (earn from borrowers)
  - Borrow $100,000 at 8.5% (from lenders)

Actually:
  - You LEND (someone borrows from you) at 8.5% → Earn $8,500
  - You BORROW (someone lends to you) at 7.5% → Pay $7,500
  - Net: +$1,000 profit on $100,000 deployed
```

<Info>
  **Key Insight**: You're on the OPPOSITE side of each trade. You lend at the higher rate (8.5%), borrow at the lower rate (7.5%), capturing the spread.
</Info>

## LP vs Lender vs Borrower

| Role     | Action                         | Earns From                       |
| -------- | ------------------------------ | -------------------------------- |
| Lender   | Provides capital at fixed rate | Borrowers paying interest        |
| Borrower | Takes capital at fixed rate    | N/A (pays interest)              |
| **LP**   | Both sides of market           | Spread between lend/borrow rates |

## Prerequisites

<CardGroup cols={2}>
  <Card title="Capital" icon="coins">
    Significant capital to make spreads worthwhile (\$100k+)
  </Card>

  <Card title="Understanding" icon="book">
    Knowledge of order books and market making
  </Card>

  <Card title="Risk Tolerance" icon="scale-balanced">
    Comfort with inventory and rate risks
  </Card>

  <Card title="Monitoring" icon="eye">
    Ability to monitor and adjust positions
  </Card>
</CardGroup>

## Basic LP Strategy

<Steps>
  <Step title="Login">
    Visit [app-staging.centuari.finance](https://app-staging.centuari.finance) and login using any of these methods:

    * **Wallets**: MetaMask, Coinbase Wallet, WalletConnect, Rabby
    * **Social**: Google, Twitter/X, Discord
    * **Email**: Passwordless email login

    <Info>
      Centuari uses **Privy** for authentication, giving you flexible login options whether you prefer wallets or social accounts.
    </Info>
  </Step>

  <Step title="Assess Market">
    Check current order book:

    * Best lend rate (what lenders want)
    * Best borrow rate (what borrowers want)
    * Current spread
  </Step>

  <Step title="Calculate Spread">
    Determine your target spread:

    * Wider spread = more profit per trade, fewer fills
    * Tighter spread = less profit, more fills
  </Step>

  <Step title="Post Orders">
    Post both sides:

    * Lend order at rate slightly above market
    * Borrow order at rate slightly below market
  </Step>

  <Step title="Monitor">
    Watch for fills and manage inventory
  </Step>

  <Step title="Rebalance">
    Adjust orders as market moves
  </Step>
</Steps>

## Example: Basic Spread Capture

```
Market State:
  Best lend ask: 8.0% (lenders want at least 8%)
  Best borrow bid: 7.5% (borrowers want at most 7.5%)
  Current spread: 50bps

Your Orders:
  Lend ask: 8.3% (you'll lend to borrowers at this rate)
  Borrow bid: 7.2% (you'll borrow from lenders at this rate)
  Your spread: 110bps

When Orders Match:
  - Borrower matches your 8.3% lend → You earn 8.3%
  - Lender matches your 7.2% borrow → You pay 7.2%
  - Net: 1.1% spread on matched capital
```

## Risks

<Warning>
  Market making has real risks. Understand before committing capital.
</Warning>

### Inventory Risk

If one side fills but not the other:

```
Scenario: Your lend order fills but borrow doesn't

Result:
  - You're now a lender at 8.3% (not bad)
  - But no matching borrow to offset
  - Your spread profit doesn't materialize
  - You just have a regular lending position
```

### Rate Movement Risk

If rates move against you:

```
You post:
  - Lend at 8.3%
  - Borrow at 7.2%

Market shifts UP:
  - New lenders want 9%
  - Your 7.2% borrow won't fill
  - You're stuck lending at 8.3% while market offers 9%

Market shifts DOWN:
  - New borrowers want 6%
  - Your 8.3% lend won't fill
  - You're stuck borrowing at 7.2% while market is 6%
```

### Collateral Risk (for Borrow Side)

Your borrow orders need collateral:

```
To market make with $100,000:
  - Need ~$125,000 collateral for borrow side (80% LTV)
  - Plus $100,000 for lend side
  - Total capital: $225,000+
```

## Advanced Strategies

<Card title="Market Making Strategies" icon="chess" href="./market-making">
  Deep dive into LP strategies
</Card>

## Expected Returns

| Spread | Monthly Utilization | Annual Return |
| ------ | ------------------- | ------------- |
| 50bps  | 100%                | 6%            |
| 100bps | 80%                 | 9.6%          |
| 100bps | 50%                 | 6%            |
| 150bps | 60%                 | 10.8%         |

**Note**: Returns depend heavily on:

* Spread captured
* Order fill rate
* Inventory management
* Market conditions

## Getting Started Steps

<Steps>
  <Step title="Start Small">
    Begin with \$10-25k to learn mechanics
  </Step>

  <Step title="Wide Spreads First">
    Start with wider spreads (lower profit, less risk)
  </Step>

  <Step title="Monitor Closely">
    Watch positions multiple times daily initially
  </Step>

  <Step title="Tighten Gradually">
    As you gain confidence, tighten spreads
  </Step>

  <Step title="Scale Up">
    Increase capital as you prove profitability
  </Step>
</Steps>

## Next Steps

<CardGroup cols={2}>
  <Card title="Market Making" icon="chart-line" href="./market-making">
    Advanced LP strategies
  </Card>

  <Card title="Fee Structure" icon="receipt" href="./fee-structure">
    Understanding LP economics
  </Card>

  <Card title="Incentives" icon="gift" href="./incentives">
    LP reward programs
  </Card>
</CardGroup>