Liquidity Pools

Create and manage liquidity pools for token trading.

What is a Liquidity Pool?

A liquidity pool is a smart contract that holds equal values of two tokens, enabling decentralized trading through an automated market maker (AMM).

Creating a Pool

Step 1: Decide on Assets

Choose token pair: Your token + ETH (or USDC)

Step 2: Set Ratio

Price = ETH Amount / Token Amount. Example: 10 ETH + 500M tokens = $0.00000002 per token

Step 3: Add Liquidity

Transfer both assets to the pool. You receive liquidity tokens (LP tokens) representing your share.

Lock Liquidity

Lock liquidity for 6-12 months to build community trust and prevent rug pulls. Locked liquidity cannot be withdrawn until lock expires.

Fees and APY

  • 0.25% - 1% trading fee (variable)
  • Fee distributed to liquidity providers
  • APY depends on trading volume and pool size

Impermanent Loss

Price divergence between pool assets causes loss for LPs. Example: If token price 10x, you lose relative to holding.

Best Practices

  • ✓ Lock liquidity for 6+ months
  • ✓ Use stable pairs (token + stablecoin)
  • ✓ Monitor pool health and trading volume
  • ✗ Don't deposit during high volatility
  • ✗ Avoid small pools (high slippage)

Next Steps