# Guide for LPs ### Collateralized loans limited to selected borrowers Safety of LP capital is secured through overcollateralization similar to other DeFi lending protocols. At the same time, access to LP capital is given to a limited number of carefully selected trading firms. This largely reduces the risks of possible hacks and exploits which may occur in lending pools with generalistic purpose. ### Extra yield linked to trading activity LPs earn time based fee applied to borrowed capital and also a share of trading volumes coming through the system. This introduces an extra incentive for liquidity provision as LPs are rewarded based on trading activity. ### Direct exchange of LP tokens A liquidity provider may submit an order through native Liquorice RFQ engine to exchange LP tokens for any supported crypto. This feature combines withdrawal of capital and tokens exchange into one transactions saving gas and time. It also helps during times of high pools utilization to withdraw capital as borrowers are incentivized to facilitate such requests to earn extra yield. --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://liquorice.gitbook.io/liquorice-docs/for-liquidity-providers/guide-for-lps.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.