# Liquidity provision

#### Glossary <a href="#glossary" id="glossary"></a>

**TVL** - total value of liquidity locked inside the pool. It changes when liquidity is withdrawn or deposited to the pools.

**Imbalance** - the measure of liquidity deficit in the pool. The lower , the higher the demand and price for this token.

**APR** - estimated yearly return on liquidity provided, based on the past bridging activity.

**Reserves** - the present pool balances.

**Reserve deficit** - the state when the **Imbalance** is negative (caused by bridging the assets out of the pool).

**Reserve surplus** - the state when the **Imbalance** is positive (caused by bridging the assets into the pool).

**Earned** - rewards on liquidity provided. They will be credited to your wallet during any operation involving the liquidity pool (i.e., depositing, withdrawing, claiming).

<figure><img src="https://docs-core.allbridge.io/~gitbook/image?url=https%3A%2F%2F2519822865-files.gitbook.io%2F%7E%2Ffiles%2Fv0%2Fb%2Fgitbook-x-prod.appspot.com%2Fo%2Fspaces%252FNvC0ThVNhxVjZ0ObrTCb%252Fuploads%252Fbe1vD2Ws7HigKxODpVol%252FPool.png%3Falt%3Dmedia%26token%3Db6e421ec-30ed-436a-a0a3-7c790e187356&#x26;width=768&#x26;dpr=4&#x26;quality=100&#x26;sign=8adf75cae0785b4b9a03baf28c9c4049e8887cf5ddb185cb871abd6e66201fe9" alt=""><figcaption></figcaption></figure>

### Reserve surplus and deficit <a href="#reserve-surplus-and-deficit" id="reserve-surplus-and-deficit"></a>

The pool **reserves** are the representation of the bridging activity. Every time the assets are bridged into or out of the pool, they affect the value of the **Imbalance**. More assets bridged out of the pool create a **reserve** **deficit**. In contrast, when more assets are bridged into the pool, it creates a **reserve surplus** in the liquidity calculations.

_Example: Let’s consider a pool with $100k deposited, Polygon USDC, for example. Initially, it has a TVL of 100k and a Reserve of $100k. If $10k was bridged from it to a different chain, the TVL would remain $100k while the Reserves adjust to $110k._

_This event causes the pool’s equilibrium to go out of balance, and the USDC’s virtual price will decrease accordingly, making it more expensive to bridge out of the pool. Bridging $10k back to the pool would result in Reserves changing back to 100k, restoring the equilibrium state._

### LP rewards <a href="#lp-rewards" id="lp-rewards"></a>

**APR** represents an estimated return on liquidity provision to each Allbridge Core pool. The LP incentives come from the bridge fees (**80%** of bridge fees are used to reward the liquidity providers). For this reason, the value of APR is **dynamic**, and the APR calculations are based on **past** bridge activity. Thus, the actual rewards may differ from the indicated APR, and this value should be perceived as a reference.

We are currently working on implementing the additional details section to track the bridge fees from last week to indicate the pool’s dynamic better.

### Liquidity rebalancing <a href="#liquidity-rebalancing" id="liquidity-rebalancing"></a>

Liquidity rebalancing is a mechanism that offers additional incentives for bringing the pool **back** to the equilibrium value.

When the pools are out of balance, the platform provides a premium for bridging the asset to an **imbalanced** pool.

More information about the **value adjustments** is available in the token value section.
