How to add liquidity on Pancakeswap V3? (to get SPACE LP tokens)
What is PancakeSwap?
PancakeSwap is a decentralized exchange (DEX) that operates on the Binance Smart Chain (BSC). It allows users to trade various cryptocurrencies in a decentralized and trustless manner, without the need for a centralized exchange.
PancakeSwap uses an automated market maker (AMM) model, which means that the price of assets is determined by the ratio of tokens in a liquidity pool, rather than by the supply and demand of buyers and sellers. This allows for faster and more efficient trading, with lower fees relative to centralized exchanges.
PancakeSwap V3 offers exciting new features, such as the ability to create custom liquidity pools with custom fee structures, and improved capital efficiency. By creating and contributing to liquidity pools, users can earn trading fees in the form of CAKE tokens, which helps to incentivize liquidity provision and create more liquid markets for trading.
What is Liquidity Mining?
Liquidity mining, also known as yield farming, is the act of providing liquidity via cryptocurrencies to decentralized exchanges (DEXs). Since the primary goal of an exchange is to be liquid, DEXs seek to reward users willing to bring capital to their platform.
Most DEXs are decentralized by replacing order books with an Automatic Market Maker (AMM). An AMM is a smart contract that regulates trading. Since smart contracts are decentralized, users do not have to trade the order book of an exchange. Instead, they effectively trade with other users.
The AMM collects these fees and grants them to each liquidity provider (LP) as a reward. Therefore, the DEX offers a symbiotic ecosystem where each group of users helps each other. While the token swapper pays a small fee to trade on a decentralized exchange, the liquidity provider earns money for providing the liquidity that the first user will need.
How to add liquidity?
PancakeSwap V3 liquidity pools allows users to trade cryptocurrencies or other assets on the BNB Smart Chain network with greater efficiency and lower fees than V2 pools.
In this step-by-step guide, you will learn how to add Space Tokens to a liquidity pool on pancakeswap.finance.
First, you will need to have Space Tokens (SPACE) and Binance Coin (BNB) on your BNB Smart Chain Wallet.
1- Once you have these tokens, you need to go to this page and connect your BNB Smart Chain wallet who contains your SPACE and BNB.
SPACE-BNB Pool Page is https://pancakeswap.finance/add/BNB/0x9e1170c12fddd3b00fec42ddf4c942565d9be577/500
2- Select the trading fee tier (0.05%)
PancakeSwap V3 offers four trading fee tiers; 0.01%, 0.05%, 0.25%, and 1%. V2 only offered one tier, which was 0.25%. Each fee tier can have a liquidity pool for each token pair, with asset pairs tending to gravitate toward the fee tier with the best incentives for both liquidity providers and traders.
You need to keep the fee tier to 0.05%.
Other tiers are not compatible to get Space LP Bonus and Staking on Final Autoclaim
3- Select “Full range” as range settings
By selecting the “Full range” option, liquidity providers can ensure that their liquidity will be utilized even in volatile market conditions, reducing the risk of impermanent loss. This setting allows the liquidity provider to specify a wider price range for the pool, which can result in a safer and more stable position.
Warning: Only the Liquidity provided with “Full Range” option will be included in your SPACE LP balance, if you want to enjoy of Space LP Bonuses and Staking on Final Autoclaim
a- Click on “Full Range” button:
b- Click on “I Understand” button:
4- Enter the amount you want to add to the liquidity pool. You need to provide SPACE and BNB in a 50/50 ratio (for example, $20 in SPACE and $20 in BNB).
5- Enable SPACE, so the token will be able to interact with the pool
Approving SPACE will require to sign a transaction on your Web3 wallet, don’t worry, it is safe.
6- Confirm the transaction, and wait for the network confirmation.
Before starting this step, please double-check that you correctly selected the “Full Range” option, and that your selected fee tier is 0.05%!
a- Click on the first “Add” button, that will show you details about the position that you will get:
b- Click on the new “Add” button, that will ask you to sign another and last transaction on your web3 wallet.
Once the tokens are added to the liquidity pool, you’ll be able to see your liquidity position by clicking on this page. In the image below you can see your SPACE-BNB position.
If we click on the position as described above, we can see that this wallet contains 137.9 SPACE and 0.01 BNB, with a total liquidity value of ~$4.82.
Congratulations! You’ve successfully added SPACE and BNB tokens to Pancakeswap V3 liquidity pool. Prepare yourself for a rewarding experience of trading and earning. Your contribution fuels the liquidity and enhances the trading experience for everyone involved.
