# 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. *** 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. *** ### 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. --- # Agent Instructions: 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: ``` GET https://docs.tezex.io/sirius-liquidity-baking/how-does-sirius-work.md?ask= ``` The question should be specific, self-contained, and written in natural language. 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.