Creating CLMM Pool
Introduction to CLMM Pool and Farm Creation
Creating a Concentrated Liquidity Market Maker (CLMM) pool and farm on XenDEX allows projects and users to create highly efficient liquidity pools and crowdsource liquidity from the community. CLMM pools support more precise market-making, offering liquidity providers (LPs) increased capital efficiency and reducing slippage for users. Farms enable projects to reward community LPs, leading to deeper liquidity and better prices for traders.
Note: Before proceeding, make sure to read this entire guide and understand the concept of concentrated liquidity.
Important Points Before Creating a CLMM Pool and Farm
Token Selection: Any token on the X1 token list can be used to create a CLMM pool, which will consist of two tokens, usually a base and quote token.
Unique Pool Requirement: Only one pool pair per fee tier is allowed on XenDEX.
Fee Tiers:
0.01% – Suitable for stable assets.
0.05% – Best for pegged-assets and high-volume pairs.
0.25% – Ideal for most trading pairs.
1% – Suited for exotic assets.
Starting Price: The amount of Quote Tokens required to purchase one Base Token.
Initial Price Range: Define the price interval for initial liquidity, which will be concentrated within this range.
Only the pool creator can set up a farm for a given CLMM pool, allowing for up to two reward tokens. One reward token must be from the pool’s token pair, while the other can be any SPL token on the X1 network.
Rewards and APR Calculation
APR Calculation: APR is based on the dollar value of rewards divided by the dollar value of liquidity in the pool, annualized. CLMM APRs are more complex to calculate than traditional AMMs.
Reward Allocation: Both trading fees and token emissions are divided among LPs in the current trading range, with LPs who set a tighter price range around the mid-price receiving a higher share of fees and emissions.
Factors to Consider for APR Calculation:
Liquidity around Mid-Price: Determine the liquidity needed within the trading range.
Reward Token Price: The price of the reward token directly affects APR.
APR Estimation: XenDEX provides APR estimates to guide pool creators and LPs on potential returns.
Important: Rewards allocated to farms are final and cannot be withdrawn. Changes to the reward rate or period are only possible 72 hours before the end of the current farming period.
Steps to Create a CLMM Pool
Navigate to Liquidity Creation
Connect your wallet, go to ‘Liquidity’ at the top of the page, and select ‘Create’ in the top right corner.
Choose ‘Concentrated Liquidity’ to begin.
Select Tokens and Fee Tier
Select the Base and Quote Tokens for the pool. The Quote Token represents the amount needed to buy one Base Token.
Set a fee tier based on the asset type (see tier options above).
Set Starting Price and Range
Enter the starting price and set a price range for the initial liquidity position. The price range will default to ±50% around the starting price but can be customized.
Enter Deposit Amounts
Set the amount of Base and Quote tokens for initial liquidity. Adjust the amounts manually if needed.
Preview and Confirm Pool
Review all settings, then click ‘Confirm Deposit’ and approve the transaction.
Note: Higher gas fees apply due to the initialization transaction. Once created, the pool’s starting price and initial liquidity cannot be edited until it opens for trading. However, you can add more liquidity or adjust positions once live.
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