> For the complete documentation index, see [llms.txt](https://swan-swap.gitbook.io/swan-swap/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://swan-swap.gitbook.io/swan-swap/products/dex.md).

# DEX

<figure><img src="/files/uBvRMWcrZC3ZEJyVB83c" alt=""><figcaption></figcaption></figure>

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Swan Swap operates as an automated market maker (AMM), facilitating token exchanges within the Shape Chain. Liquidity for the exchange is provided by Liquidity Providers (LPs) who stake their tokens in Liquidity Pools, receiving LP tokens in return. These LP tokens can then be staked to earn $SWAN tokens through our "Farms."

Liquidity Pools are essential to Swan Swap, as the exchange relies on ample liquidity to execute trades efficiently. By providing liquidity, users receive LP tokens and, in return, earn rewards from trading fees. This ensures that there is always sufficient liquidity available for the exchange.

Yield farming offers an additional opportunity for users who provide liquidity to earn $SWAN rewards. By locking their LP tokens into a smart contract, users participate in the yield farming process, contributing to the liquidity and overall growth of the Swan Swap ecosystem.

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