Liquidity used to facilitate token swaps (SWAP). A large amount of liquidity ensures minimal slippage, stable exchange rates, and high transaction execution speed. In turn, liquidity providers, by supplying liquidity, are rewarded and earn profits from fees.
❓How to Provide Liquidity and Benefit from It?
You can supply liquidity on various decentralized exchanges (DEXs). To do so, you first need to select a profitable pool with high returns. The yield is typically displayed on the pool’s page. Let’s walk through the process using STON.fi as an example.
1️⃣ Visit the STON.fi website, connect your TON wallet, and ensure you have enough tokens to participate in the pool.
2️⃣ Go to the 'Pools' section, where you’ll find a list of available pools. For instance, let’s choose the STON/USDT pool. While the fee-based yield here might not be the highest, users receive an additional farming reward—currently 31%. This pool also offers protection against impermanent loss.
❗To add liquidity to this or any other pool, you need to contribute an equal value of both cryptocurrencies in the pool. For example, if you want to invest 100 USDT, you’ll also need an equivalent amount of STON.
3️⃣Select the pool and click 'Add Liquidity.'
4️⃣Specify the amount of tokens you wish to contribute.
5️⃣Confirm the transaction in your TON wallet.
Once you’ve provided liquidity, you’ll receive LP tokens, which represent your share in the pool. These tokens automatically start generating income from a portion of the fees collected from every trade in the pool. Additionally, on STON.fi, you can earn extra rewards through farming, further boosting your overall profitability.
