Adding Liquidity to a Liquidity Pool
Yeah, swapping is great but earning income from trading is a lot better! Let's learn how to do this by adding liquidity to a liquidity pool (LP). Adding liquidity to an LP allows you to earn passive income by getting a fee from each trade conducted on that trading pair.
In this example, we'll learn how to add liquidity to the CFX-ETH pool.
- 2 different kinds of assets for which you'll provide liquidity to the liquidity pool. The amount of those assets should be provided in equals parts in USD value. Swappi will auto-calculate how much funds from each asset you'll need to provide. In this example, we'll use the CFX-ETH pair.
- Your wallet connected to Conflux eSpace and Swappi.
- CFX to pay for gas transaction costs.
- 1.In Swappi, go to Liquidity.
- 2.Click Add Liquidity.
- 3.Select the pair of assets that you want to provide liquidity for.
- 4.In Token A, enter the amount of liquidity that you want to provide.
- 5.The amount of available liquidity will be completed in Token B.
- 6.Click Approve ETH (or the token that you're adding to the pool) to approve the transfer of your token to the liquidity pool contract.
- 7.In MetaMask, click Confirm to confirm the approval of this transaction.
- 8.Now, click Supply to start adding your funds to the liquidity pool.
- 9.Confirm the details of the transaction by clicking Confirm Supply.
- 10.Finally, approve the transaction in MetaMask by clicking Confirm.
You have just added liquidity to the CFX-ETH liquidity pool! As a result, you received a liquidity pool token which proves that you own a position in this liquidity pool. [insert image here]
- 1.Click Add PPI-LP to add the liquidity pool token to MetaMask.
- 2.In MetaMask, confirm adding this token by clicking Add Token.
- 3.Now, in Swappi, go to Liquidity.
You'll notice that Swappi now shows you an LP Balance, which represents the amount of LP tokens that you own from that liquidity pool. [images also go here]
In the next section, we'll learn how to increase our earnings on Swappi.
- Exchange section on Swappi, for a detailed guide on adding/removing LP tokens to/from a liquidity pool, as well as other useful information on liquidity pools.