# How Does Sirius Work?

## How does it work?

**Sirius DEX** operates as a decentralized exchange (DEX) for two assets: **Tez (XTZ)** and **tzBTC**. It combines standard DeFi DEX features with unique protocol-level incentives, making it especially attractive for liquidity providers.

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Sirius functions like any other decentralized exchange, but it exclusively facilitates trades between two assets: **XTZ** and **tzBTC**.

* **Trading Fees:** Traders pay a **0.2% fee (20 basis points)** on each transaction.
  * **0.1% is burned**, reducing the total XTZ supply.
  * **0.1% is added to the liquidity pool**, increasing its value for liquidity providers.

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### For Liquidity Providers

Liquidity providers (LPs) supply equal amounts of XTZ and tzBTC to the pool and are rewarded in two ways:

1\. **Transaction Fees:**

* LPs earn a proportional share of the **0.1% fee** retained in the pool from every trade. This is distributed based on their contribution to the total pool liquidity.

2\. **Protocol-Level Subsidy:**

* The Tezos protocol directly subsidizes liquidity providers with **5 tez per block**.
* This subsidy is distributed proportionally among all LPs based on their share of the pool.