How to add liquidity to Uniswap V3 pool on Gnosis? (to get xSPACE LP tokens)
What is Uniswap V3?
Uniswap V3 is a decentralized exchange (DEX) that operates on multiple blockchains, including Ethereum and other Ethereum-compatible networks. It allows users to trade various cryptocurrencies in a decentralized and trustless manner, eliminating the need for a centralized exchange.
Uniswap V3 utilizes an automated market maker (AMM) model, where the price of assets is determined by the ratio of tokens in a liquidity pool, rather than the traditional supply and demand dynamics of buyers and sellers. This ensures faster and more efficient trading, often with lower fees compared to centralized exchanges.
Uniswap V3 introduces exciting new features such as concentrated liquidity, where liquidity providers can specify price ranges for their contributions. This results in improved capital efficiency and potentially higher returns. Additionally, Uniswap V3 allows for the creation of custom fee structures and provides enhanced flexibility for liquidity providers.
Operating across multiple chains, Uniswap V3 expands its reach and usability, offering users the ability to trade on various blockchain networks. By creating and contributing to liquidity pools, users can earn trading fees in the form of UNI tokens, incentivizing liquidity provision and helping to 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?
Uniswap V3 liquidity pools allows users to trade SPACE with other assets on the Gnosis Chain.
In this step-by-step guide, you will learn how to provide liquidity to Uniswap V3 liquidity pool with our new liquidity UI.
First, you will need to have Space Token (SPACE), USD Coin (USDC), and some xDAI for gas fee in your Web3 Wallet on the Gnosis Chain.
We recommend using Rabby.io as Web3 wallet, since that’s probably the most secure and the user experience is great.
1- Once you have these tokens, go to the SPACE liquidity UI
SPACE Liquidity UI: https://liquidity.spacetoken.tech/?chainId=100
2- Connect your Web3 wallet that contains your SPACE and USDC.
Click the “Connect Wallet” button
If you use Rabby, the UI will automatically switch to Gnosis Chain.
3- Enter the amount you want to add to the liquidity pool.
You need to provide SPACE and USDC in a ~50/50 ratio (for example, $3 of SPACE and $3 of USDC).
Clicking on ‘Max’ button will automatically fetch the maximum amount that you can add to the pool, according to your xSPACE and USDC balances.
The UI will automatically ensure that the 50/50 ratio is respected.
4- 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.
Confirm the approval transaction, and wait for the network confirmation.
5- Enable USDC, so the token will be able to interact with the pool
Approving USDC will require to sign a transaction on your Web3 wallet, don’t worry, it is safe.
Confirm the approval transaction, and wait for the network confirmation.
6- Click the “Add Liquidity” button
7- Sign the transaction on your web3 wallet.
After some time, we will confirm you that you succeed to add liquidity!
If you click on ‘Positions’ button, you’ll be able to see your liquidity position.
We can see that this position contains ~975 xSPACE and ~3.45 USDC.
This corresponds to around 6.75 SPACE LP.
As you can see, you can close your position any time, be sure to bookmark the positions link: https://liquidity.spacetoken.tech/positions, so you can manage your positions simpler just by opening the link.
🎉Congratulations!
You’ve successfully added xSPACE and USDC to Uniswap V3 liquidity pool on Gnosis Chain.
You can now refresh your SPACE LP balance on Final Autoclaim Space Bonus Page to enjoy bonuses on the website.
Once you have refreshed your LP balance, you can activate the xSPACE LP staking pool to enjoy high APR.
