Liquidity Pools
Provide liquidity for a token pair and earn a share of the fee for each trade between those tokens.
A liquidity pool is an accumulation of funds locked in a smart contract. It is used to facilitate decentralized trading by providing liquidity to a pair of tokens.
All users who provide tokens to the smart contract are liquidity providers, and they gain a share of the fee for each trade in the token pair they provided.
Providing Liquidity in the Taco Swap
How to create a liquidity pool between two tokens.
Go to swap.tacocrypto.io and click on Liquidity
Login with your WAX Wallet. Don't have one? Learn how to create one here.
Click on "+ Add Liquidity"
Select the two tokens you want to provide. To provide liquidity, users send in a 50/50 split of both tokens at the current swap price
Confirm the action by clicking on the "Add Liquidity" button
If you are the first to add liquidity for a pair of tokens, a pop-up will appear during the process confirming the creation of a new pool.
Managing Liquidity in Taco Swap
Users can easily manage the deposit or withdrawal in the Liquidity Pools they are invested in:
Go to swap.tacocrypto.io and click on Liquidity
Login with your WAX Wallet. Don't have one? Get to know how to create one here.
Now you are able to see the Liquidity Pools you have invested in, with your share
Click + Add or - Remove to provide more liquidity or withdraw it
Insert the amount of liquidity you want to add or remove
Confirm the action
There is no commission on the deposit or withdrawal of liquidity and the liquidity can be deposited or withdrawn at any time.
Liquidity Providers Fees
Taco Swap rewards users that add liquidity to trading pools. They will receive a share of the fee when other users swap within those pools.
0.1% of all trade volume is distributed proportionally to all liquidity providers. This is added directly to the user's liquidity and can be collected any time.
Risks
Providing liquidity has risks to be aware of. The main risk of using Liquidity Pools that you should be aware of before investing is Impermanent Loss. Because of this, many experts view high volume and low volatility liquidity pools as the best one to invest in. This is not financial advice.
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