> For the complete documentation index, see [llms.txt](https://docs.liqfinity.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.liqfinity.com/features/provide-liquidity-and-earn/how-it-works.md).

# How it works?

When you provide liquidity on Liqfinity, your funds are locked into the platform, allowing you to start earning rewards immediately. Here's how it works:

* **Unlocking Flexibility**: You can request to unlock your funds at any time, but there is a 21-day unlocking period to ensure platform liquidity remains stable.
* **Earning Rewards**: Rewards are calculated daily and can be claimed anytime without a lock period. 90% of hourly fees are distributed to liquidity providers and divided proportionally based on their contributions to the total pool and current tier.
* **Fair Distribution**: Unlocking your funds does not affect the rewards you’ve already earned, ensuring fairness across all participants.

This system offers flexibility while maintaining platform stability, making it a reliable and transparent way to earn passive income.

{% hint style="warning" %}
**Note**: Rewards are only paid if there are active loans where users are generating hourly fees.
{% endhint %}


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