What are Liquidity pools?
Liquidity pools are an investment product that allows users to receive passive income by providing liquidity (tokens) to a pool for AMM (Automated Market Making). Users who have provided tokens to the pool are called liquidity providers.
A liquidity pool is a smart contract with a pair of tokens on its balance (for example, USDT / USDN), that provides liquidity for Waves Exchange decentralized trading. The liquidity pools facilitate and speed up the trading process by means of AMM (Automated Market Making). The AMM algorithm automatically places orders by using pools liquidity. AMM controls the proportion of tokens in each pool depending on the price change.
By investing tokens in a pool, the liquidity provider receives the LP token (for example, USDTUSDNWXLP). The growth of the LP token price and, accordingly, the cost of all LP tokens on the balance of the liquidity provider is its passive income. The liquidity provider is able to increase its income by staking LP tokens. Staking LP tokens, the liquidity provider receives WX tokens, the income from the sale of which is his additional passive income. To boost this additional passive income, the liquidity provider can "freeze" their WX tokens. This will lead to an increase in the number of WX tokens that the liquidity provider receives for staking LP tokens.
The following image clearly demonstrates all the stages of investing.
Liquidity pools tab guide
The Pools tab consists of several sections: Pools, Dashboard, Boosting, Stats, IDO, Early Birds.
Via Pools section, you can familiarize yourself with the existing liquidity pools, their profitability, total value of tokens invested in the pool and total trading volume of the pool. Through this section, you can invest tokens in the pool by clicking the Deposit button.
The Dashboard section displays information about your deposits to pools, current profitability (APY), total income, and the number of LP tokens. In the My Transactions area of the Dashboard section, can be found all invest transactions to the pool and LP tokens staking.
Via the WX Staking / Boosting section, you can increase profitability from investing in liquidity pools and check your current gWX balance, the amount of gWX required for boosting, as well as other information about the current and possible profitability.
Also in the section you can claim WX tokens that were received as a reward for gWX.
The Stats section provides statistics on the planned release schedule for WX tokens, the number of released and blocked WX tokens, and the price of WX.
In the IDO section, you can claim WX tokens purchased at IDO and view information about the purchased WX tokens.
In the Early Birds section, you can claim WX tokens that are due to users who invested in liquidity pools before November 25.
Income: base vAPY, reward tAPY, governance reward
The income from investing in pools depends on the investment model that users choose. Waves.Exchange users can invest in pools without staking, invest in pools with staking, invest in pools with staking, and with locking WX tokens.
The base vAPY depends on the price of the LP token of a pool, which users receive in return for the invested tokens. The price of LP token depends on trading activity: as a result of trading, the balance of tokens in the pool increases, which leads to an increase in the price of the LP token. The base vAPY indicates the growth in the number of pool tokens (e.g. WAVES/USDN) that a liquidity provider receives when they return one of their LP token back to the pool (i.e. the withdraw action). Read more about base vAPY in the FAQ.
The Reward tAPY (paid in WX tokens) indicates the amount of the reward for staking LP tokens and depends on the price of WX token. Reward tAPY can be increased by boosting, simply put, locking WX tokens. Read more about reward tAPY in the FAQ.
The Governance reward (paid in WX tokens) is received by those users who have locked WX on a smart contract (for example, to boost tAPY). The governance reward is made up of trading commissions for the execution of orders on the exchange during the AMM operation. More info about the Governance reward can be found in the FAQ.
How to invest tokens in a liquidity pool
Open the Waves.Exchange app, log in to your account and then click on the Pools button. After that, select the pool from the list in which you want to invest tokens (for example, USDT/USDN) and click the Deposit button.
In the appeared pool tab choose the "Deposit" form, specify the amount of one of the tokens that you want to invest in the pool (the amount of the second token will be inserted automatically). After that, click on the Deposit and Stake button.
Note: you can uncheck the "Stake --- straight after the deposit" while the filling in the Deposit form. In this case, LP tokens will not be staked automatically and will be credited to your account balance.
How to stake LP tokens
If you unmarked the checkbox Stake --- straight after the deposit during the tokens investment, you, probably, will need to stake LP tokens in the future. The same situation may occur if you bought LP tokens in the spot market.
To stake LP tokens, open the Waves.Exchange app, log into your account, and then click on the Pools button. After that, select the pool from the list whose LP tokens are on your account balance (for example, USDT/USDN) and click the Deposit button.
In the tab that appears, open the "Stake" form, enter the amount of LP tokens you want to stake, and click the Stake button.
How to boost your income
Boosting is activated automatically for gWX holders. To get gWX you need to lock WX tokens on the Boosting page. The amount of gWX you need on your balance to have the maximum boosting is displayed on the Boosting page in the Pools APY with gWX table.
To boost income, open the Waves.Exchange app, log into your account, and then click on the Pools button. After that, navigate to the "WX Staking / Boosting" tab. In the "WX Staking / Boosting" tab specify the amount of WX tokens you want to lock, select the lock period and click on the Stake WX button.
How to claim income (WX tokens) for LP tokens staking
To get WX tokens from staking LP tokens, open the Waves.Exchange app, log into your account, and then click on the Pools button. After that, select the pool you have invested in your liquidity (for example, USDT/USDN) and click the Deposit button.
On the pool page, open the Claim WX form. The "Unclaimed reward" field displays the amount of WX tokens that are credited to you as income for staking LP tokens. To transfer this amount to your account balance, click on the Claim button.
How to unstake LP tokens
To unstake LP tokens, open the Waves.Exchange, log into your account, and then click on the Pools button. After that, select the pool, the LP tokens of which you want to unstake (for example, USDT/USDN), and click the Deposit button.
Then open the "Unstake" form, enter the LP tokens amount that you want to unstake to the "I send ---" field and click the Unstake button.
How to withdraw tokens from the pool
To withdraw liquidity (tokens) from the pool, open the Waves.Exchange app, log into your account and then click on the Pools button. After that, select the pool from which you want to withdraw tokens (for example, USDT/USDN) and click the Deposit button.
On the pool page, open the "Withdraw" form. Enter the amount of LP tokens to the "I send ---" field and in the "I receive" field the number of pool tokens that you receive will be displayed. After that, it will be enough to click on the Withdraw button to receive the invested tokens to your account balance.
If you have any questions related to Waves.Exchange, feel free to contact us via customer support
tags: liquidity pools wx invest passive income