> For the complete documentation index, see [llms.txt](https://docs.electra.exchange/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.electra.exchange/electra-liquidity-provider-pool/how-elpp-works.md).

# How ELPP Works

<figure><img src="/files/Rj4FpSDS9VOsmO1iHbxS" alt=""><figcaption></figcaption></figure>

### Basic Flow <a href="#docs-internal-guid-092f5fd3-7fff-ca4e-eda5-cde286d1bb53" id="docs-internal-guid-092f5fd3-7fff-ca4e-eda5-cde286d1bb53"></a>

ELPP works through a straightforward process:

Liquidity Contribution:

* When you deposit funds, you receive ELPP tokens representing your share in the pool.
* These tokens track your ownership and reflect your claim on the pool’s assets and trading outcomes.

Broker Operations:

* A dedicated market maker utilizes the pooled liquidity to execute trades on the market..
* Profits (or losses) from these operations directly impact the pool’s value.

Automatic Profit Distribution:

* Profits increase the value of each ELPP token automatically
* Trading gains are automatically put in the pool, increasing the value of each ELPP token.
* This model eliminates the need for manual claiming or harvesting of rewards.

### Main Components

**The Liquidity Pool**&#x20;

The core of ELPP is a shared liquidity pool that:

* Collects assets from multiple providers
* Functions as a tokenized vault (each provider receives tokens representing their share)
* Automatically distributes profits to all participants
* Protects against sudden mass withdrawals

**The Broker (Market-Maker)**

The broker component:

* Uses pooled liquidity for market-making operations
* Executes trading strategies to generate profits
* Reports performance metrics that affect the withdrawal system

**The Epoch-Based Withdrawal System**

The withdrawal system:

* Divides time into fixed periods called "epochs" (typically 3 days each)
* Assigns withdrawal requests to future epochs based on performance
* Ensures orderly exits that protect the pool during market volatility