Providing Liquidity
This article provides a step-by-step guide on how to create, manage, and close liquidity positions on TangleSwap. For a detailed overview of the application, please refer to the Liquidity Pools dApp explainer.
Create a liquidity position
TangleSwap has implemented two different user interfaces for liquidity pools: LITE mode, and PRO mode.
LITEoffers a beginner-friendly, intuitive, minimal experience.PROgrants access to all the advanced features and full capabilities of TangleSwap's CLMM technology.
Lite Mode
To provide liquidity in LITE mode, follow the steps illustrated in the video below.
Please note that you may also switch between
LITEandPROmode at any time from the settings menu. ⚙️
In LITE mode, users provide liquidity in the ‘full range’ of prices, from zero to infinity. This strategy is sometimes called ‘set-and-forget’, because it generally requires little to no active management by the user.
Pro Mode
To provide liquidity using the PRO mode, follow these steps:
Step 1: Navigate to the Liquidity Pools interface.
Step 2: Connect your wallet to TangleSwap, and ensure the toggle for
PROmode is enabled.
Step 3: Click the
+ New Positionbutton.
Step 4: Choose the two tokens you want to provide as liquidity. The order in which you select the tokens does not matter. Browse the list to find your desired token(s), or search by the token's name or contract address if that is more convenient.
Importantly, the TangleSwap protocol is able to use every single token that exists in the network. You can simply copy-paste its address, and the interface will automatically display the token's information for you.
Before you provide liquidity for a given pair of tokens, it is essential to consider factors such as Total Value Locked (TVL), trading volume, and the potential for price fluctuations. We highly recommend including the TangleSwap Analytics website as part of your research — plus, we hope you will enjoy its aesthetics. 💜
Step 5: Review the Fee Tier for your liquidity pool.
Please note: it is common for the liquidity providers to align around one 'default' fee tier each token pair. Consequently, the TangleSwap interface automatically selects the fee tier with the most liquidity. For those users who are new to providing liquidity, we suggest sticking with the auto-selected fee tier. Nonetheless, advanced custom strategies may benefit from providing liquidity in alternative fee tiers.
Step 6: Set the Price Range for your liquidity pool.
Your price range will adjust automatically to the nearest possible value (called the CLMM 'tick'). Additionally, besides selecting a specific price range, you always have the option to provide liquidity across the whole spectrum by clicking on Full Range. Fun fact: this behaviour is identical to a conventional AMM DEX! 💡
Step 7: Enter your token
Deposit Amounts.
- After selecting your token pair, your fee tier, and your price range, please type the amount of one token that you would like to deposit. The required amount for the other token will be automatically filled in.
- If desired, you can flexibly adjust your token ratio by changing the min/max price range, either symmetrically (with the same % on both sides of the current price), or asymmetrically. This is a really useful method to adjust the exposure you have to the two different tokens (for example, with a 70% SMR / 30% USDC pool).
- Note that selecting a price range which is outside the current market price will require you to provide only one token (instead of two). All these concepts are visually illustrated in the animation below:
Step 8: If needed, the TangleSwap interface will prompt you to approve the token(s).
If MetaMask asks for a custom amount to approve, we suggest choosing Default instead of Max. In this way, you won't need to approve the same transaction later on. You can learn more about approvals here.
Step 9: Click on
Preview, verify your transaction details, and then clickAddto provide your liquidity.
Step 10: Confirm the transaction in your wallet.
Step 11: Done! You can now either
Closethe confirmation window, or clickView transactionto see your transaction details on the network's explorer.
Step 12: Delight yourself at the sight of your newly created liquidity pool position within your pools overview.
Increase liquidity on a position
Follow the simple steps illustrated in the video guide below to increase the amount of liquidity inside your existing liquidity pool position.
Remove liquidity from a position
To decrease the amount of liquidity inside your position, follow the steps from the video guide below. To close a position and fully redeem your funds, simply select 100% when removing your liquidity.
Collect fees from a position
To collect the fees generated by your liquidity pool positions, follow the steps outlined in the video guide below. Please note that you can reinvest the funds back into your position by simply clicking on Increase Liquidity.
In the near future, the TangleSwap crew will announce sophisticated state-of-the-art solutions to optimize and manage your concentrated positions, including automatic reinvesting of fees generated.