Liquidity
Adding liquidity allows the contributor to earn 0.2% swapping fees from the pairs they've provided. You can supply liquidity and start earning fees via adding liquidity here. Your liquidity can earn even more rewards (BOOs) if they're staked at farms!
When you've provided liquidity, you will receive spLP tokens (Spooky Liquidity Provider tokens) as proof of contribution. For example, if a user deposited $BOO and $FTM into a pool they would receive BOO-FTM spLP tokens. These tokens represent a proportional share of the pooled assets.
These spLP tokens can be staked at farms to earn BOO. We have 18+ pairs for you to stake, the most diverse farms on Fantom chain.
If at the time of a trade, there are 100 spLP tokens representing 100 FTM and 100 BOO, each spLP token would be worth 1 FTM and 1 BOO.
If one user trades 10 FTM for 10 BOO, and another traded 10 BOO for 10 FTM, then there would now be 100.02 BOO and 100.025 FTM in the pool.
This means each LP token would be worth 1.00025 FTM and 1.00025 BOO when it is withdrawn.
You need to provide tokens in a 1:1 value ratio to the liquidity pool. This means that if you are adding to, say, a BOO-FTM pool, and wish to provide 2000 FTM worth of liquidity, you would need to convert approx 1000 FTM to an equal value of BOO tokens first via our Swap.
If the pool you wish to provide liquidity to does not exist, you can create it of course! Just provide the tokens and off you go. As the first liquidity provider, you set the initial exchange ratio (price) if one of the tokens in the pair does not exist yet on SpookySwap. This often quickly corrects itself through arbitrage and by more liquidity providers adding to the pool.
By adding liquidity, you are putting equal USD value of 2 ingredients to make LP tokens.
Here's how to do it:
Requirements
- MetaMask wallet
3. Next, click "Select Token" to choose which tokens you'd like to add.
4. Choose a token from the list. If it is not on the list, you can search for its address and add it to the list
5. Select the second token
6. Enter the amount you'd like, you can also click on "MAX" to max out. The other ingredient amount will automatically adjust to the same value in USD.
7. When you're happy with the amount, click "Supply" and your wallet will ask you to confirm, or if you would like to instantly stake into the Farm, click Supply & Stake In Farm. Not all pairs will allow direct staking into a Farm.
If this is your first time making LP tokens with the ingredients, click "Approve" for both tokens. This may take a few seconds to update from your wallet. Click "Supply" after it becomes enabled.
8. When your "Supply" request has been sent to FTMscan, this confirmation screen will show up. You can check the link to FTMscan for its progress but this usually takes seconds.
9. You can check that your liquidity has been absolutely made by going to "My Potions" and manage them. Though staked tokens will not display here at the moment.
Voilà! You have made your liquidity and are on your way to earning fees!
Want to earn more with your liquidity? See the next section, Liquidity Farm for how to stake those spLP tokens to earn BOOs!
Impermanent Loss (aka IL) is one of the risks you take on for being a liquidity provider and is a result of how AMMs function. Here are two articles to better explain it:
https://pintail.medium.com/understanding-uniswap-returns-cc593f3499ef
https://blog.bancor.network/beginners-guide-to-getting-rekt-by-impermanent-loss-7c9510cb2f22
They will give you an idea of what IL is and how you are affected by it. Stay tuned for more info!
TL;DR: Large swings in the relative price difference of the two tokens in the pool could result in a loss compared to holding the tokens themselves if you withdraw at that precise moment (hence the term impermanent). The loss is only "permanent" if you withdraw your liquidity completely, however that does not mean the IL will necessarily go away over time. Generally speaking, the trading fees received for being a liquidity provider and the yield from the farm can offset IL risk, but nothing is guaranteed.
Last modified 2mo ago