How to add liquidity on LFJ (prev. Trader Joe)? (to get SPACE-AVAX LP tokens on Avalanche C-Chain)

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?

In this step-by-step guide, you will learn how to add Space Tokens to a liquidity pool on LFJ (prev. Trader Joe).

Firstly, you will need to have Space Tokens (SPACE) and Avalanche (AVAX) on your Web3 Wallet compatible with Avalanche C-Chain (As Web3 Wallets, you can use Metamask, Trust Wallet, Rabby, or Frame...).

1- Once you have these tokens, you need to go to this page and connect your wallet who contains your SPACE and AVAX.

Click on the “Connect Wallet” Button to link your Web3 Wallet

2- Enter the amount you want to add to the liquidity pool. You need to provide SPACE and AVAX in a 50/50 ratio (for example, $20 in SPACE and $20 in AVAX).

Once you entered the amount, click on the “Approve SPACE” and “Add Liquidity” buttons, it will ask you for some confirmations on your wallet.

3- Approve 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.

4- Confirm the transaction, and wait for the network confirmation.

Click on “Add liquidity” button, it will ask you for a last signature on your wallet.

Once the transaction is confirmed, that means the tokens are added to the liquidity pool, you’ll be able to see your liquidity by clicking at the bottom of the page:

Congratulation! You have successfully added SPACE and AVAX tokens to the LFJ liquidity pool!