Standard Liquidity (AMM)
How to Provide Liquidity:
Go to the 'Liquidity' section in Trader AI and connect your digital wallet.
Choose the token pair you want to add to the pool. Your assets need to match in USD value, maintaining a 1:1 ratio. Input the amount for one token, and the platform will automatically equalize the other to maintain the ratio.
Confirm the transaction and you'll receive a notification once it's processed.
What Happens Next?
You'll obtain LP tokens, representing your share of the pool, allowing you to reclaim your assets whenever you choose.
Each swap transaction within the pool incurs a fee, a portion of which is redistributed to the liquidity pool, enhancing the value of your LP tokens over time.
Pool Explanation :
When you add money to one of Trader AI's liquidity pools, you're given special tokens called LP tokens. Say you put in Bonk and USDC, you'd get BONK-USDC LP tokens. Think of these tokens like a receipt that shows how much you put into the pool, and you can use this receipt to get your money back whenever you want.
Every time someone trades Bonk for USDC, there's a small fee of 0.25%. Most of this fee, 0.22%, goes back into the pool, making everyone's LP tokens a little bit more valuable. The remaining 0.03% is used to support the value of Bonk.
Here's a simple example: if the pool starts with 100 LP tokens, which are worth 100 USDC and 100 Bonk, each LP token would be like having 1 USDC and 1 Bonk. After some trades with fees added, the pool might have 100.022 USDC and 100.022 Bonk. So now, each LP token you have would be worth a tiny bit more - 1.00022 USDC and 1.00022 Bonk.
Please watch the video related to impermanent loss to understand the risk before adding liquidity.
At Trader AI, your liquidity fuels the market, and in return, you gain a piece of the trading action. Welcome to a fluid, profitable experience as a liquidity provider with us!
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