Provide Liquidity
Last updated
Last updated
While the Bio Protocol's Liquidity Engine automatically seeds an initial liquidity pool (LP) for every new project, community members can also choose to provide additional liquidity to deepen the market and support the project's long-term health.
By providing liquidity, you can:
Earn Trading Fees: You'll receive a share of the fees generated from every swap in the liquidity pool. The more trades that happen, the more you can potentially earn.
Support New Projects: Your contribution helps new tokens establish a stable and healthy market, which is crucial for their long-term growth and success.
Improve Trading for Everyone: A deeper liquidity pool means less slippage and a better trading experience for the entire community, including yourself.
To provide liquidity, you will need to deposit a pair of assets into the project's LP on the decentralized exchange (DEX) where it trades. For projects launched on Bio, this is typically a pair of the project's token and BIO.
General Steps:
Go to Uniswap: For projects launched on Bio, liquidity pools are created on Uniswap. Navigate to the "Pool" or "Liquidity" section of the app.
Acquire Both Tokens: You will need an equal value of both the project's token and BIO in your wallet. For example, if you want to provide $100 of liquidity, you would need $50 worth of the project token and $50 worth of BIO.
Find the Pool: Search for the correct liquidity pool by pasting in the contract address for the project's token. Always use the official address provided by the project team to avoid scams.
Select the Tokens and Amount: Choose the project token and BIO, and specify the amount you wish to deposit. The Uniswap interface will automatically balance the ratio for you.
Approve and Supply: You will need to approve Uniswap to spend both of your tokens, and then confirm the final transaction to add your assets to the liquidity pool.
In return, you will receive LP tokens, which represent your share of the pool. You can redeem these LP tokens at any time to withdraw your underlying assets.
Disclaimer: Providing liquidity carries its own risks, including impermanent loss. Please do your own research and understand the risks before participating.