💧 Liquidity Providing
What is Liquidity Providing?
Liquidity Providing (LP) means depositing two tokens into AstroSwap’s pools so others can trade with them. In return, you earn a share of the trading fees.
With AstroSwap V3 Pools, your liquidity is not spread evenly across the entire price curve. Instead, it is concentrated in the price ranges you choose — giving you higher efficiency and potentially better rewards.
Why Provide Liquidity?
Earn Fees: Every trade generates fees, which are distributed proportionally to LPs.
Higher Capital Efficiency: V3’s concentrated liquidity allows fewer tokens to support greater trading volume.
Custom Strategies: You can choose a wide range (safer, lower return) or a narrow range (riskier, higher return).
Steps to Provide Liquidity
Connect Wallet
Same as swapping: connect your wallet and ensure you’re on X Layer.
Select a Pair
Go to the “Pools” page and click “Add Liquidity”.
Choose a pair, e.g. OKB/ USDT.
Choose a Fee Tier
Different fee tiers suit different pairs (e.g., stablecoins prefer low fees, volatile pairs prefer higher fees).
Set Price Range
Narrow Range: Higher potential returns, higher risk.
Wide Range: Lower returns, safer.
Not sure? You can use “Full Range” to cover the entire curve.
Deposit Tokens
Enter the amounts of both tokens (the ratio will be calculated automatically).
Confirm and sign the transaction in your wallet, then pay the gas fee.
Receive LP NFT
Your liquidity position will be represented as an NFT in your wallet, showing your share of the pool and your entitled rewards.
Managing Your Liquidity
Withdraw Funds: You can withdraw all or part of your liquidity anytime.
Collect Fees: Fees from trades accumulate in your position; click “Collect” to claim them.
Adjust Strategy: Add/remove liquidity or change your price ranges as market conditions shift.
Risks to Know
Out-of-Range Risk: If the market price moves outside your chosen range, your liquidity becomes inactive and turns into a single token until the price returns.
Impermanent Loss: When token prices diverge, your returns may be lower than simply holding.
Market Volatility: High volatility may require more frequent adjustments to your ranges.
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