The Shocking Truth About What LPs Are Really Being Paid For on Stabull

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What LPs Are Actually Getting Paid For on Stabull

By Jamie McCormick, Co-CMO, Stabull Labs

The 12th article in the 15 part “Deconstructing DeFi” Series.

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Recently, the Stabull team has been analyzing trading activity (excluding interactions with our user interface) on our pools across Base, Ethereum, and Polygon. We’ve noticed similar patterns of behavior on all three networks – the same trading strategies are being repeated across different pools, assets, and chains, making them easy to identify.

We’ve used Base as a key example in this series, not because it’s special, but because a sudden increase in transactions on Base at the start of the New Year first alerted us to this issue. As we investigated further, we discovered the same patterns were happening throughout the entire system.

As a crypto investor, what I’ve been seeing across different platforms is that simply providing liquidity isn’t enough to earn significant rewards anymore. It’s not just about staking your assets and collecting fees for ‘showing up’; you really need to be active and strategic to make good returns.

They are being paid for reliability inside execution paths.

As an analyst, I’ve found that grasping the difference between UI and non-UI volume is crucial. It really explains why tracking non-UI activity is so important, and often signals a more reliable and valuable trading opportunity than what we typically see from retail investors.

Liquidity as infrastructure, not inventory

In most automated market makers, providing liquidity is similar to stocking a store’s shelves. The liquidity simply waits for traders to use it.

On Stabull, liquidity increasingly behaves like infrastructure.

It is:

  • embedded into automated execution flows 
  • selected by solvers and routing engines 
  • relied upon as a stable conversion step 

This shows that limited partners aren’t simply making occasional trades; they’re actually helping entire systems operate smoothly.

When a bot, aggregator, or solver routes through a Stabull pool, it is doing so because it expects:

  • predictable pricing 
  • low failure risk 
  • consistency across market conditions 

That expectation is what LPs are compensated for.

Why non-UI volume is often better volume

Retail UI swaps tend to be:

  • sporadic 
  • sentiment-driven 
  • sensitive to incentives 
  • highly cyclical 

Non-UI volume looks very different.

It is:

  • repeatable 
  • programmatic 
  • strategy-driven 
  • indifferent to marketing or UX 

From an LP perspective, this matters because non-UI volume tends to:

  • occur more frequently 
  • arrive in smaller, repeatable trade sizes 
  • persist across market regimes 

From my analysis, this means we can expect a consistent and predictable income stream, instead of relying on occasional spikes in business followed by lulls.

What LPs are being paid for, concretely

Our review of transactions on Base, Ethereum, and Polygon shows that liquidity providers are being paid for:

  • Execution certainty

     Trades can complete atomically without reverting. 
  • Price alignment

     Oracle-anchored pricing keeps pools aligned with off-chain reference prices. 
  • Low slippage at practical trade sizes

     Especially important for automated strategies. 
  • Composability

     Pools can be dropped into multi-leg execution paths without bespoke logic. 

Whenever a transaction uses a Stabull pool instead of another option, it’s prioritizing those specific features and benefits.

Fees are the reward for providing them.

The “toll booth” model revisited

As described in the previous article, liquidity provision on Stabull resembles a toll booth.

LPs are not:

  • lending assets 
  • underwriting credit risk 
  • relying on borrower repayment 

They are:

  • enabling transactions to pass through 
  • charging a small, predictable toll each time 

A key benefit is that liquidity providers (LPs) earn fees simply from usage, even if users aren’t aware of Stabull. They get paid when people are actually using the liquidity, not just when they’re hearing about it.

Why fee quality matters more than fee size

While a large trade can bring in more fees than many smaller trades, it also carries a higher degree of risk and uncertainty.

What we observed instead was:

  • many small to medium trades 
  • routed repeatedly through the same pools 
  • as part of ongoing strategies 

While each individual transaction might not seem impressive, this level of activity creates significant value in the long run.

It compounds.

How this fits into the broader LP picture

For LPs on Stabull, yield typically comes from two sources:

  1. Swap fees

     Generated by real transaction flow and paid in liquid output currencies. 
  2. STABUL incentives

     Distributed via the Liquidity Mining Program through Merkl to support early growth and attract liquidity. 

As a crypto investor, I’ve learned that swap fees are what really matter in the long run. While incentives can get a project going and attract users, it’s consistent usage – people actually swapping tokens – that creates lasting returns. Incentives are great for a boost, but real usage is what keeps the yield going.

As non-UI volume grows, the balance shifts naturally toward organic fees.

Why this is still early

The transactions reviewed represent a snapshot, not an endpoint.

Many execution systems:

  • gradually test liquidity 
  • start with small trade sizes 
  • increase routing only after reliability is proven 

That means today’s non-UI volume often precedes larger, more consistent flows later.

From a lender’s point of view, this stage is often ideal – demand is increasing, but there’s not yet a lot of available funds to meet it.

What LPs should take away

The important takeaway is not just that LPs are earning fees.

It’s why they are earning them.

Stabull LPs are being paid for:

  • providing stable execution infrastructure 
  • enabling automated systems to function 
  • sitting quietly inside the plumbing of DeFi 

The more Stabull is used across different blockchains, the more consistent profits Liquidity Providers will see – not from temporary excitement, but from steady, repeated use.

Looking ahead

Our next article will take a broader look at the different players involved in this activity beyond the user interface. We’ll explain the roles of bots, solvers, and aggregators, and detail how each one connects with Stabull.

About the Author

Jamie McCormick is a Co-Chief Marketing Officer at Stabull Finance. He’s been with the company for over two years, focusing on how the protocol fits into the changing world of DeFi (decentralized finance).

As an analyst, I’ve been tracking the development of key players in the crypto space, and I’ve noted that he founded Bitcoin Marketing Team back in 2014. They’re actually Europe‘s longest-running agency specializing in crypto marketing. Over the last ten years, they’ve built a strong track record working with a diverse range of projects in both the digital asset and Web3 industries.

Jamie started following cryptocurrency back in 2013, and has always been particularly interested in Bitcoin and Ethereum. More recently, over the past couple of years, he’s become increasingly focused on decentralized finance – specifically, how it actually works in practice, not just in theory.

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2026-03-31 01:42