One of the advantages of the decentralized nature of AMMs is the ability to create liquidity pools or allow anyone to add liquidity to an existing pool of assets. By doing so, anyone who is a part of the pool can earn from the liquidity fee incentive (currently being 0.3%) being paid out by the protocol to liquidity providers. The fee comes from the trading activities done when users swap between any given pair of tokens.
Before proceeding to add liquidity to any pool, it is recommended to do your research on the pool, as not all the tokens on the Beam swap are on the default token list.
To add liquidity to a pool, follow these few steps:
Step 1
Connect your wallet to the Swap page at https://swap.onbeam.com/pool.
Step 2
Go to the "Pool" section and click “Add liquidity”
Step 3
From the dropdown options, choose the asset pair you wish to provide as liquidity. For example, if you have BEAM and AVAX, select BEAM in the first dropdown, and then AVAX in the second dropdown option.
Step 4
Enter the amounts for each token. Both assets should have roughly proportional amounts to maintain the ratio within the pool. Beam Swap will automatically calculate the second amount needed once you input the first.
Step 5
Review your input. Approve the transaction to be spent. Click on "Supply" and verify the transaction in your wallet. Once confirmed, you should be able to see your liquidity pool (LP) position and also receive an LP token in your wallet.
And that's it! You have successfully added liquidity to a pool on Beam swap. If you encounter any difficulty while trying to add liquidity, you should find some troubleshooting tips in our FAQ articles.