How to Add/Remove Liquidity

Follow our guide below to deposit BEP-20 tokens in liquidity pools to earn trading fees on Grabity!

Before you start providing liquidity on Grabity DEX, please review the risks of impermanent loss that exists while holding LP tokens to earn passive income:

  • Impermanent loss (IL) occurs as the number of tokens in liquidity pools changes during volatile markets. Let's assume that there's a liquidity pool for tokenA-tokenB. If the price of tokenA increases relative to tokenB, the quantity of tokenA within the liquidity pool will decrease while the quantity of tokenB increases. If you decide to redeem your assets in the liquidity pool by returning your LP tokens, you will receive less tokenA and more tokenB than your initial deposit. Comparing that to holding both tokens in your regular wallet, there's a slight loss. The greater the change in price, the bigger IL you will be exposed to. Although IL is somewhat mitigated by trading fees that you receive for holding LP tokens, you should be aware of potential losses you may suffer.

  • We recommend this article by Binance Academy for an in-depth analysis of impermanent loss.

1. Connect your wallet.

2. Access the liquidity page by clicking on the [Liquidity] submenu under the [Trade] menu on the navigation bar.

3. Click on [Add Liquidity].

4. Select two tokens to provide liquidity.

  • If you're the first liquidity provider, you will have to set the initial ratio (price) of the pool. Be sure to set the ratio at a reasonable price to avoid extreme IL.

  • If you're providing liquidity to an existing pool, the ratio will be automatically applied based on the current prices of tokens.

5. After reviewing the prices and your share, approve tokens by clicking on the [Approve <Token Name>] button. You will be prompted to authorize your transaction through the wallet you've connected with.

6. Click on [Supply] and sign your transaction to complete your liquidity provision.

7. Once your transaction is completed, you will receive LP tokens that represent your shares of the pool.

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