Adding Liquidity
XenDEX’s liquidity pools enable anyone to provide liquidity by adding assets to a pool, allowing them to earn fees from trades within the pool.
How to Add Liquidity to a Pool
Access the Liquidity Section
Select ‘Liquidity’ in the navigation menu.
Choose a Pool
After connecting your wallet, enter a token mint/pool address or ticker in the search bar, or browse the list of available pools.
Click ‘Deposit’ on the pool you wish to join.
Select Tokens and Add Liquidity
Choose the tokens you want to contribute. You must add liquidity in a 1:1 ratio by USD value.
Enter the amount of the first token; the second token amount will auto-adjust to maintain the 1:1 ratio.
Click ‘Supply’ and approve the transaction in your wallet.
Confirmation and LP Tokens
After confirming the transaction, you’ll receive Liquidity Provider (LP) tokens in your wallet, representing your share of the pooled assets.
Optional: Stake LP Tokens
If the selected pool has a farm you want to join, click ‘Stake’ to deposit your LP tokens.
How to Manage Your Liquidity
Navigate to Portfolio
Go to the ‘Portfolio’ page, then select ‘Standard’ under ‘My Position’.
Manage Your Position
To reclaim tokens or increase your position, choose the desired action and confirm the transaction.
Understanding Liquidity Pools and LP Tokens
When you add assets to a pool, you receive LP tokens (e.g., DEX-USDC LP tokens if you deposited DEX and USDC). These tokens represent a proportional share of the pool and can be redeemed for the underlying assets at any time.
Earning Fees
Each trade in the pool incurs a 0.25% fee.
0.22% is returned to the LP pool, increasing the value of all LP tokens.
0.03% is allocated to the Community and Ecosystem Fund to support protocol development.
Example
If there are 100 LP tokens representing 100 DEX and 100 USDC, each LP token is initially worth 1 DEX and 1 USDC. If additional trades occur, increasing the pool balance to 100.022 DEX and 100.022 USDC, each LP token would now be worth 1.00022 DEX and 1.00022 USDC when withdrawn.
Note on Impermanent Loss: If you’re unfamiliar with impermanent loss, it’s recommended to review this article on this concept to understand how it may impact returns in liquidity pools.
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