Liquidity
When providing liquidity for token pairs on Moraswap you will earn 0.2% of Trading Fee on DEX. It will be distributed to Liquidity Providers (LPs) as LP tokens. For example:
At the same time you will also receive LP tokens as proof of your contribution in Moraswap's Liquidity. They will become the biggest source of profit if used in Farming.
So if you are LPs, you will earn 0.2% Trading Fee + Profit from Farming. But just at the moment because there is no frontier for future applicability of LP Token on Moraswap.
So you guys can start to learn how to be a LP!
How to add liquidity
Requirements
MetaMask wallet.
Some NEON for gas.
Tokens to add liquidity.
Steps
Go to the Add Liquidity Page.
Connect your wallet and make sure that it is on Neon chain.
Select 2 tokens you’d like to add liquidity.
Enter the amounts you’d like, you can also use the bar to do it in an easier way.
Click “Confirm Adding Liquidity” button and your wallet will ask you to confirm the transaction. If this is your first time making LP tokens with the ingredients, click "Approve" for both tokens. This may take a few seconds to update from your wallet. Click "Confirm Adding Liquidity" after it becomes enabled.
Confirm Liquidity information to add then click "Confirm Supply".
Go to “View Liquidity Positions” to check and manage your added liquidity. Now you can earn trading fee.
Impermanent Loss
Impermanent Loss (aka IL) is one of the risks you take on for being a liquidity provider and is a result of how AMMs function. Here are two articles to better explain it:
https://pintail.medium.com/understanding-uniswap-returns-cc593f3499ef
https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22
They will give you an idea of what IL is and how you are affected by it. Stay tuned for more info!
Large swings in the relative price difference of the two tokens in the pool could result in a loss compared to holding the tokens themselves if you withdraw at that precise moment (hence the term impermanent). The loss is only "permanent" if you withdraw your liquidity completely, however that does not mean the IL will necessarily go away over time. Generally speaking, the trading fees received for being a liquidity provider and the yield from the farm can offset IL risk, but nothing is guaranteed.
Last updated
