A liquidity pool acts as a reservoir for cryptocurrencies. It holds two sets of tokens in equal value. Managed by Decentralized Exchange (DEX) smart contracts, these pools ease swaps. The trader withdraws Token A from one side and adds Token B to the other. This ensures prompt and secure transactions, as assets are available. Without funds in the pool, trading would be impossible.
Liquidity providers deposit tokens into the pool, benefiting from this role. Token creators often add liquidity to DEXs to enable trading. Liquidity providers earn a percentage of transaction fees. They are 0.2% on platforms like STON.fi. All providers receive a part of this fee according to their share of the pool. For instance, someone provides 50% of the liquidity. They get half of the 0.2% fee from each transaction in that pair.
Step 1: Navigate to the ‘Pools‘ tab and select your preferred liquidity pool, such as STON/TON. Take note of the TVL, Volume, and APR indicators, then click on ‘Add liquidity.’
Important: To provide liquidity, you’ll need an equivalent value of both tokens, not just equal quantities. Ensure you have TON and STON tokens in your wallet.
Step 2: Enter the desired amount for the first token, and the system will automatically calculate the corresponding amount for the other token. Click ‘Provide Liquidity.’
Step 3: In the popup window, review the monthly APR, your share in the pool, and the blockchain fee. Confirm the transaction by clicking ‘Confirm liquidity provision.’
Step 4: Confirm the transaction in your wallet.
You’re all set! Liquidity has been provided, and you’ll immediately begin earning a share of fees from each transaction in that pair.
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