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flask-round-potionHow to Provide Liquidity (LP) on Onyx

By providing liquidity, you enable others to swap tokens on the Gonka network. In return, you earn a share of the transaction fees generated by that specific pool.

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The Reward Structure

Every time a swap occurs, a 0.3% fee is charged:

  • 0.2% is paid directly to Liquidity Providers (you).

  • 0.1% is allocated to the Protocol.

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Step-by-Step Tutorial

1

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Navigate to the Liquidity Tab

Go to the Liquidity sectionarrow-up-right on the Onyx dApp. Here you will see a list of existing pools or the option to create a new one.

2

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Select Your Token Pair

Choose the two tokens you wish to provide (e.g., axlUSDC and GONKA).

  • Note: You must provide an equal dollar value of both tokens. If you want to add $100 of liquidity, you will need $50 of Token A and $50 of Token B.

3

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Connect and Approve

  • Click Connect Wallet.

  • Enter the amount for one of the tokens; the interface will automatically calculate the required amount for the second token.

  • Click Approve for each token. This gives the smart contract permission to move the tokens from your wallet into the pool.

4

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Supply Liquidity

  • Once approved, click the Add Liquidity button.

  • Review the details in the confirmation pop-up, including your share of the pool.

  • Confirm the transaction in your wallet.

5

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Receive LP Tokens

After the transaction is successful, you will receive LP Tokens in your wallet. These represent your "receipt" or your ownership share of the pool. As long as you hold these tokens, you are continuously earning your portion of the 0.2% swap fees.

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The "Top Pools" Sidebar

On the side of your screen, you can monitor the performance of the network's core pools:

  • Fees: Shows the total volume of fees collected by the pool. Remember, 0.2% of every swap here goes directly to the providers.

  • APY: Your estimated yearly return based on current trading activity.

  • GNK & Stables: Identify pools featuring the GNK token or Stables (axlUSDC/axlUSDT). GNK pools support the network's native growth, while stables offer lower price volatility.

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Why Top Pools Matter

The sidebar helps you decide where to deploy your assets:

  • Find High Demand: High Fees indicate the most active trading pairs.

  • GNK Growth: Pairing GNK with Stables is the engine of the Gonka network.

  • Real-Time Data: Use the APY to maximize your earnings by identifying the most rewarding pools.

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Managing Your Position

You can view your active positions at any time under the Remove Liquidity section.

  • Adding More: You can increase your position by following the same steps above.

  • Withdrawing: To stop providing liquidity, click Remove. You will return your LP tokens to the protocol and receive your original assets plus any accumulated fees back into your wallet.

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Key Consideration: Impermanent Loss

When providing liquidity, the ratio of your tokens will change based on trading activity. If one token’s price moves significantly compared to the other, you may have less total value than if you had simply held the tokens in your wallet. However, the earned trading fees are designed to help offset this risk.

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