Liquidity
(accessed via Trade > Liquidity)
Last updated
(accessed via Trade > Liquidity)
Last updated
A user can choose to provide liquidity to an existing pool (or create a new one) for a pair of tokens. Each pool has two tokens in it – held in quantities that represent an equal value of each token.
When a user provides liquidity, the exchange will give them an LP token in exchange for the tokens entered into the pool. This LP token represents the users share of the pool’s value and can be exchanged later for a share of the tokens held in that pool at the time liquidity is withdrawn. Users earn fees for providing liquidity, which are added to the value of the LP token automatically and will be released to the liquidity provider on withdrawal.
If available, the user may be able to farm their liquidity tokens in , to earn additional rewards. While providing liquidity tokens are exposed to a risk known as or divergent loss.
Ensure your wallet is connected to the DEX (see ).
There are two ways to add liquidity, the first, below, is the recommended method for providing liquidity for an LP pair available to farm under the feature.
Open the side menu and tap .
Find the LP pair you wish to provide liquidity for, and toggle it open via the chevron on the right side.
NOTE: If you cannot find the token pair you wish to provide liquidity for, this means there are no Meat pools available for your pair. You can still add liquidity but will need to use the provided below.
On the left of the drop down pane, now visible, you will find a link reading Get (followed by the name of the LP pair). Tap on this link.
The DEX will open the liquidity provision page, with the details for your selected LP pair preloaded.
Enter the amount of one of the tokens you wish to provide as liquidity, the DEX will automatically calculate the correct number of the second token and enter it in the corresponding field.
Once everything looks satisfactory, tap Supply.
NOTE: It may be necessary to tap the Enable button before being able to use the Supply button. You will need to authorise the DEX to interact with your token before the transaction can be completed.
NOTE: If you have an insufficient balance of either token the supply button will not appear and a warning message will appear in its place, if this happens you will need to adjust your token inputs accordingly until the supply button appears.
Carefully review the figures in the next window and if they are satisfactory tap Confirm Supply.
You will then be prompted by your wallet app to approve the transaction and the associated transaction fee (paid with Binance Smart Chain BNB).
Open the side menu and tap Trade > Liquidity.
Tap on the Add Liquidity button visible at the bottom of the pane
Under the Input fields tap the dropdown and select the tokens in your wallet that you would like to provide liquidity for.
NOTE: If you cannot find the tokens you would like to provide liquidity for, in the dropdown, you can manually enter the contract addresses of the desired tokens. When adding the token using a contract address read the warning message carefully.
Now enter the amounts of the tokens you would like to provide liquidity for. If liquidity already exists for the pair, you will need to provide liquidity in the matching ratio. However, if no liquidity exists for the pair you are providing, then a warning message will be displayed at the top of the pane.
Once everything looks satisfactory, tap Supply.
NOTE: It may be necessary to tap the Enable button before being able to use the Supply button. You will need to authorise the DEX to interact with your token before the transaction can be completed.
Carefully review the figures in the next window and if they are satisfactory tap Confirm Supply.
You will then be prompted by your wallet app to approve the transaction and the associated transaction fee (paid with Binance Smart Chain BNB).
Once approved, the transaction will be sent to the network for processing. Though this usually takes only about a minute, when the network is under high demand, transactions can take much longer.
When complete, the tokens will be removed from your wallet and replaced with the LP token for the pair you supplied.
Open the side menu and tap Trade > Liquidity.
Tap on the Add Liquidity button visible at the bottom of the pane
Locate the LP token you wish to remove and tap the dropdown, review the details and if you they are satisfactory tap Remove.
Now enter the amount of the LP token you would like to remove and tap on Remove.
NOTE: It may be necessary to tap the Enable button before being able to use the Supply button. You will need to authorise the DEX to interact with your token before the transaction can be completed.
Carefully review the figures in the next window and if you are happy click Confirm.
You will then be prompted by your wallet app to approve the transaction and the associated transaction fee (paid with Binance Smart Chain BNB).
Once approved, the transaction will be sent to the network for processing. Though this usually takes only about a minute, when the network is under high demand, transactions can take much longer.
When complete, the LP tokens will be removed from your wallet and replaced with the tokens for the pair you originally supplied.
As the tokens staked in a liquidity pool are held in quantities that represent equal value, the number of each token (or the value of those tokens) will adjust constantly to maintain the balance. When a pool holds too many of one token its value will be below the market value and arbitrage traders will buy these discounted tokens to sell elsewhere for profit. This will rebalance the pool. Likewise, where the value of a token changes, the quantity of each token that the LP token represents will also change.
These changes can result in a situation, where a user would be better off simply holding their tokens, rather than providing liquidity. However, if the rewards received by providing liquidity exceed the losses incurred through impermanent loss, then the user will still be in profit regardless, when compared to simply holding.
Impermanent loss is impermanent (not permanent), because should the ratio between the two tokens' relative values return to the same point as when the tokens were placed in the liquidity pool, the liquidity provider would suffer no loss, as compared to simple holding.
Providing neither token falls in value, any loss incurred would only represent a reduced profit, not a loss of the liquidity provider's principal.
Impermanent loss can seem like a complex subject, but the main points to remember are:
Liquidity pairs are based on the value ratio between two tokens
If the token ratio changes (i.e. both tokens don't move the same percentages in the same direction), that is impermanent loss
Impermanent loss only becomes actual loss when you withdraw tokens from the liquidity pool, otherwise there's always the chance the token ratio could regain balance
If both tokens increase in value, any impermanent loss only affects potential profits
The second method for providing liquidity is more suited to providing liquidity for a pair where there is no farm available to stake your LP token.
Ensure your wallet is connected to the DEX (see ).
Ensure your wallet is connected to the DEX (see ).
For further examples of impermanent loss as well as links to some helpful resources, check out our guide on