Providing liquidity 8NUM/TON
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8NUM is a fungible token whose price correlates with the price of the “Anonymous Telegram Numbers” NFT. Users can buy or create (via NFT fragmentation) any amount of 8NUM tokens and use them as they wish. It is important to remember that using 8NUM carries certain risks. Since the price of 8NUM depends on the market dynamics of the “Anonymous Telegram Number” NFT, it can be subject to significant fluctuations. It is recommended to conduct your own research and consult financial experts before making any investment decisions.
What is a liquidity pool on a DEX?
A liquidity pool on a decentralized exchange (DEX) is a mechanism that allows users to trade cryptocurrencies without the need to find a counterparty for the transaction. Instead, users can exchange their tokens for other tokens using a liquidity pool that contains a certain amount of both tokens.
Example of a Trading Pair 8NUM/TON:
8NUM is a fungible token whose price correlates with the price of the NFT “Anonymous Telegram Numbers.”
Suppose you have 100 8NUM and want to exchange them for TON. You can use a liquidity pool for this operation. The liquidity pool already contains a certain amount of 8NUM and TON. When you send your 100 8NUM to the liquidity pool, the smart contract automatically deducts the corresponding amount of TON from the pool and sends it to you. This way, you receive TON without needing to find a counterparty for the exchange.
This process also works in reverse: if you have TON and want to exchange it for 8NUM, you can send TON to the liquidity pool, and the smart contract will automatically add the corresponding amount of 8NUM to your wallet.
Where Do Tokens in the Liquidity Pool Come From?
Tokens are provided to the liquidity pool by liquidity providers, as it can be profitable. Often, the creators of a token, when adding it to a DEX for trading, provide the initial liquidity themselves—otherwise, no one would be able to buy it.
Without liquidity pools, trading would be impossible, and hence, the DEX itself would not function. Liquidity providers earn income—they are paid a percentage for each transaction within the pool. On STON.fi, this is 0.2% of the transaction amount. This 0.2% is distributed among all liquidity providers proportionally to their share in the pool (for example, the one who provided 50% of the total liquidity will receive half of 0.2% from each transaction in that pair).
How to add Liquidity to the 8NUM/TON Pair
First, let’s understand what a liquidity pool is. It’s a mechanism that allows traders to exchange cryptocurrencies with each other without involving a third party.
Now, let’s learn how to provide liquidity. It’s straightforward, and you can withdraw your funds at any time.
Step 1: On the ston.fi Exchange
Go to the Liquidity tab and select the liquidity pool you are interested in. In our case, it’s 8NUM/TON. Review the TVL (Total Value Locked), Volume, and APY (Annual Percentage Yield) metrics, and click ‘Add liquidity’.
Note that to provide liquidity, you will need an equivalent value of both tokens (not the same amount, but equivalent value). We have TON and 8NUM in our wallet. If you don’t have the required tokens, you should exchange TON for 8NUM or vice versa.
Step 2: Enter the Amount
Enter the amount for the first token, and the system will automatically calculate the amount of the second token. Click “Provide Liquidity”.
Step 3: Confirm Details
In the popup window, you will see the monthly APR, your share in the pool, and the blockchain fee. Confirm the transaction by clicking ‘Confirm liquidity provision’.
Step 4: Approve the Transaction
Approve the transaction in your wallet.
All set! You have provided liquidity and will start receiving a share of the fees from each transaction in this pair. Within a few seconds, you will receive LP tokens—special tokens from our DEX that confirm the provision of liquidity.
How to withdraw tokens from the liquidity pool
Withdrawing funds from a liquidity pool is a straightforward process.
Step 1: Go to the Pools Section
Navigate to the Pools section and select the My Pools tab to see all the pools where you have provided liquidity.
Step 2: Select the Desired Pool
Choose the liquidity pool from which you want to withdraw funds and click the Withdraw button at the bottom of the pool’s page.
Step 3: Choose Withdrawal Amount
In the window that opens, you can select the percentage of your provided liquidity you want to withdraw. To withdraw the entire amount, select MAX.
Step 4: Withdraw Liquidity
Click Withdraw Liquidity and confirm the transaction in your wallet.
It’s important to remember that withdrawing funds from a liquidity pool is also a transaction. You must have enough TON in your wallet to pay for the blockchain fees to complete the operation.
When withdrawing liquidity, pay attention to the amount of each token in your position. Fees from transactions were added to your position for the entire duration of liquidity provision. Also, always remember the risk of impermanent loss.