# LiquidityProvision

How yield generation works on STONfi — a practical breakdown
If you're active in DeFi, understanding the mechanics before committing capital matters. Here's how STONfi's yield system actually works.
Three distinct mechanisms:
1. Liquidity provision
You deposit a token pair into a STONfi pool. In return you receive LP tokens representing your share of the pool. Every swap that routes through that pool generates a fee, a portion of which goes to LPs proportional to their share.
Risk to understand: impermanent loss. If the price ratio of your deposited pair shifts significantly, you may end up wi