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Liquidity Providing

Earn yield by providing liquidity

Liquidity Pools

A liquidity pool is a pool of tokens that are locked in a smart contract on a blockchain. The tokens in the pool are used to facilitate trading on decentralized exchanges (DEXs) and provide liquidity to the markets.

How to Provide Liquidity on ShadeSwap

Liquidity Providing on ShadeSwap is simple to do, follow the below guide to get started.

  1. To get started, visit ShadeSwap: https://app.shadeprotocol.io/swap/pools

  2. The liquidity pools screen will be featured directly on the "Pools" tab.

  3. Search through the list of supported liquidity pools.

  4. Now click on a liquidity pool that you want to provide to.

    1. Note: Since Shade Protocol is built on Secret Network, this enables modular privacy for the end user. This means that you may need to click "View Balance" and sign a wallet transaction in order to see your token balance.

  5. Ensure that you already own one or two of the assets in the chosen liquidity pool.

  6. Choose whether you want to provide both tokens to the liquidity pool, or one single token to the liquidity pool (known as single-sided liquidity providing).

    1. Note: That you may need to click "Approve" and sign a wallet transaction in order for the smart contract to use your assets.

  7. Execute your liquidity provision by pressing the “Provide” button. This will prompt a standard wallet transaction.

    1. For more advanced traders, click the Gear icon on the top right for more trade settings.

  8. Note the two options when clicking "Provide":

    1. Mint LP Shares + Stake: Earn further rewards by staking your LP token in Shade's reward contract.

      1. Note: You can unstake your LP tokens instantly at any time!

    2. Mint LP Shares: Hold onto your LP tokens and only collect trading fees.

Liquidity Providing Tool Tips

  • Single-Sided Liquidity Providing (SSLP): Refers to providing one single asset in the liquidity pool. On the backend, the user's asset is partially swapped to provide into the pool, making a more seamless user experience.

  • Custom LP Ratio: Refers to providing a custom ratio of assets in the liquidity pool. On the backend, the user's asset is swapped to the given ratio and provide into the pool.

  • Expected Shares: Expected amount of Liquidity Provider tokens (LP tokens) received in exchange for the liquidity provided.

  • Minimum LP Shares: Refers to the minimum predicted output from the liquidity provision. This takes into account the potential slippage you may encounter.

  • Asset Refunded: Single-sided liquidity assets are swapped resulting in a deposit ratio which may not match the current liquidity pool ratio. Extra tokens which would not contribute to your pool share are refunded back to the user.

  • Slippage Tolerance: Refers to the maximum amount of slippage you will tolerate in a given swap transaction. If the swap has an actual slippage greater than the slippage tolerance, the transaction will fail.

  • Pool Ownership: The percent of the total pool LP shares that the user will own.

Providing liquidity on ShadeSwap can be done with one or two tokens. ShadeSwap takes care of the manual work for the user!

SSLP has potential to gain &/or lose from arbitrage

  • Since there is a swap on the backend, there may be a larger refund or larger LP if there is profit

  • If there is a loss from arbitrage, then the user incurs that in the form of price impact

How to Withdraw Liquidity on ShadeSwap

Withdrawing liquidity on ShadeSwap is simple to do, follow the below guide to get started.

  1. To get started, visit ShadeSwap: https://app.shadeprotocol.io/swap/pools

  2. The liquidity pools screen will be featured directly on the "Pools" tab.

  3. Search through the list of supported liquidity pools for your pool position, or toggle "Only show my pools".

    Note: liquidity pools with a green dot in the "My Pools" column represent your respective LP position

  4. Now click on the liquidity pool that you want to withdraw from.

  5. Ensure that you click the toggle to "Withdraw Liquidity"

  6. Choose whether you want to withdraw your liquidity position and receive two tokens from the liquidity pool, or receive one single token from the liquidity pool (known as single-sided withdrawing).

  7. Execute your liquidity withdrawal by pressing the “Withdraw” button. This will prompt a standard wallet transaction.

    1. For more advanced traders, click the Gear icon on the top right for more trade settings.

Withdrawing Liquidity Tool Tips

  • Expected Received: Expected amount of tokens (LP tokens) received from withdrawing the provided liquidity.

  • Minimum Asset Received: Refers to the minimum predicted output from the liquidity provision. This takes into account the potential slippage you may encounter.

  • Slippage Tolerance: Refers to the maximum amount of slippage you will tolerate in a given swap transaction. If the swap has an actual slippage greater than the slippage tolerance, the transaction will fail.

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