> For the complete documentation index, see [llms.txt](https://docs.tidal.finance/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.tidal.finance/getting-started/network-roles/liquidity-providers.md). # Liquidity providers Liquidity providers act as syndates, supplying insurance collateral in exchange for policyholder premiums. Depending on the policy design, the collateral amount is typically much less than the coverage capacity that it supports, resulting in a high earning ratio. To ensure that sold policies have backup capital in the event of a default, withdrawing liquidity has a lockup term that is longer than the policy's maximum length. The exact withdrawal waiting term will be mentioned on the collateral contract in each pool. During the withdrawal period, liquidity providers might still earn premiums and face capital losses if a payout happens. The capital loss is proportional to the entire asset value in the collateral pool. For example, if Bob's deposit is 10% of the overall collateral pool and 100 USDC are used for payout, his loss is 100 x 10% = 10 USDC. --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.tidal.finance/getting-started/network-roles/liquidity-providers.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.