V3 Pair deposit
Last updated
Last updated
In the V3 LP Pool, liquidity management is managed though LP NFTs. This new framework not only allows liquidity providers (LPs) to earn a share of the fees but also introduces a more customizable approach to liquidity provision.
When you add tokens to a Liquidity Pool in V3, you're awarded Liquidity Provider NFT tokens, symbolizing your contribution and your share in the pool's trading fees. These NFTs represent unique liquidity positions with specific settings, granting LPs enhanced control over their desired price range for deploying liquidity.
Unique NFT Positions: Liquidity positions in V3 are encapsulated as transferable NFTs, each carrying the ownership of the underlying assets and the accrued trading fees.
Redemption: You can withdraw your funds at any time by removing your liquidity from the pool.
V3 introduces the concept of active liquidity, allowing LPs to set their positions to be active within specific price ranges. Should the market price exit this range, the position becomes inactive—holding only one type of token and ceasing to earn trading fees.
This feature enables LPs to concentrate their liquidity within chosen price ranges, significantly increasing capital efficiency. Concentrated liquidity means that with the same amount of assets, V3 can facilitate larger trades, offering higher relative liquidity and the potential for increased trading fee earnings compared to V2.
By providing liquidity, LPs earn trading fees from swaps executed using their pool. In V3, each trade incurs a fee (ranging from 0.01% to 1%, depending on the pool's fee tier), directly rewarding the LPs of the pool.
To add liquidity, select any token pair of your choice. The lower value of the two tokens (in USD) determines the maximum liquidity you can provide. Here’s a simple guide:
Please note that the example below is only for illustrative purposes.
1 . Visit the Liquidity page and click the “Add Liquidity” button.
2. Choose the two tokens in the trading pair you want to add liquidity. In this case, we are going to use KLAY and USDT as an example.
3. You can confirm the version as well as the fee tier of the liquidity pool you are providing by looking for the “V3 LP - x% fee tier” displays.
If you want to customize the fee tier, click “More”, and choose the desired fee tier.
Please note that it is always advisable to provide liquidity to the most popular fee tier.
4. You can review and confirm the price range on the right side.
The chart shows the level of liquidity across all the price ranges. You can zoom in and out using the magnifier buttons. You can pan and navigate the chart by dragging the bottom x-axis.
If you want to customize the price range. Simply drag the handles, click the + and - buttons on the two prices, or click the two price numbers and enter them manually.
Although it is not advisable, you can provide your liquidity to the whole price range by clicking the “Full Range” button.
5. Enter an amount on one of the tokens under “Deposit Amount”. The other should be calculated and filled automatically. If one of the tokens does not have enough balance. You will see an error and the button is greyed out. Please enter a lower amount to proceed or use the “MAX” button to fill in the maximum available value.
6. Click the “Enable USDT” button. If you are adding liquidity against tokens other than KLAY, you might need to click enable twice for each token in your pair. Your wallet will ask you to confirm the action.
7. The “Add” button will then light up. Click to proceed.
8. A new pop-up window will appear to preview your liquidity position. If everything looks good, click “Add” again to proceed.
9. Your wallet will ask you for confirmation. Confirm your transaction from your wallet.
10. Soon after, you will see your new liquidity position on the “My Liquidity” page. And you will be able to check its detail by clicking on the position.
