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What are Liquidity pools?
Liquidity pools are an investment product that allows users to receive passive income by providing liquidity (tokens) to a pool for AMM (Automated Market Making). Users who have provided tokens to the pool are called liquidity providers.
A liquidity pool is a smart contract with a pair of tokens on its balance (for example, WX/WAVES), that provides liquidity for WX Network decentralized trading. The liquidity pools facilitate and speed up the trading process by means of AMM (Automated Market Making). The AMM algorithm automatically places orders by using pools liquidity. AMM controls the proportion of tokens in each pool depending on the price change.
By investing tokens in a pool, the liquidity provider receives the LP token (for example, WXWAVESLP). The growth of the LP token price and, accordingly, the cost of all LP tokens on the balance of the liquidity provider is its passive income. The liquidity provider is able to increase its income by staking LP tokens. Staking LP tokens, the liquidity provider receives WX tokens, the income from the sale of which is his additional passive income. To boost this additional passive income, the liquidity provider can vote for the liquidity pool he invested in. This will lead to an increase in the number of WX tokens that the liquidity provider receives for staking LP tokens.
Liquidity pools tab guide
The Pools tab consists of several sections: "Pools", "Dashboard", "Setup Pool".
Via the "Pools" section, you can familiarize yourself with the existing liquidity pools, their profitability, the total value of tokens invested in the pool, and the total trading volume of the pool. Through this section, you can invest tokens in the pool by clicking the "Deposit" button.
The "Dashboard" section displays information about your deposits to pools, current profitability (APY), total income, and the number of LP tokens. In the "My Transactions" area of the "Dashboard" section, can be found all investment transactions to the pool and LP tokens staking.
The "Setup Pool" section provides you the form to create your own liquidity pool with a verified token.
Income: base vAPY, reward tAPR
The income from investing in pools depends on the investment model that users choose. WX Network users can invest in pools without staking, invest in pools with staking, invest in pools with staking, and with locking WX tokens.
The base vAPY depends on the price of the LP token of a pool, which users receive in return for the invested tokens. The price of LP token depends on trading activity: as a result of trading, the balance of tokens in the pool increases, which leads to an increase in the price of the LP token. The base vAPY indicates the growth in the number of pool tokens (e.g. WX/WAVES) that a liquidity provider receives when they return one of their LP token back to the pool (i.e. the withdraw action). Read more about base vAPY in the FAQ.
The Reward tAPR (paid in WX tokens) indicates the amount of the reward for staking LP tokens and depends on the price of WX token. Reward tAPR can be increased by boosting. To boost your reward tAPY, just vote for the pool you invested in. Read more about reward tAPR in the FAQ.
You can simulate investment in the pool using an Income calculator to understand what reward you will receive. Each pool has its own calculator.
How to invest tokens in a liquidity pool
Open the WX Network app, log in to your account and then click on the "Pools" button. After that, select the pool from the list in which you want to invest tokens (for example, WX/WAVES) and click the "Deposit" button.
In the appeared pool tab choose the "Deposit" form. In this form choose whether you want to invest using one token or two tokens. Then, specify the amount of either investment token (the amount of the second token will be inserted automatically). After that, click on the "Deposit and Stake" button.
Note: for the one-token investment is charged Exchange fee (0.15%).
Note: you can uncheck the "Stake --- straight after the deposit" while the filling in the Deposit form. In this case, LP tokens will not be staked automatically and will be credited to your account balance.
How to boost your income
The boosting process consists of two parts. First, you need to stake WX to "receive" gWX (voting power token). Then, your need to vote for the pool you invested in using your gWX. You can simulate boosting using an Income calculator to understand how your tAPY will change after boosting is activated. Each pool has its own calculator. BTW, the WX stakers receive passive income on a weekly basis.
To boost income and start to receive additional passive income, open the WX Network, log into your account, then hover over the "Governance" item and click on the "Get gWX".
After that, specify the amount of WX tokens you want to lock, select the lock period, and click on the Get gWX button.
Right after WX locking, you receive gWX and can use it for voting. Just navigate to the WX Emission page.
Choose the pool you invested in and click on the Vote button.
In the popup window specify gWX amount you want to use for voting. Then more gWX you specify, the more your boosting will be in this pool. After that, you will see how your boosting and profitability for staking LP tokens of the pool will change. After reviewing this information, click on the Vote button.
Your reward for staking LP tokens will increase after the end of the current voting period (max 7 days). You can check the voting end time on the WX Emission Distribution voting page.
Note: since the amount of your gWXs decreases every minute (according to the mechanics of gWX turnover), your boosting will decrease after each voting period for WX Emission Distribution, since it depends on the amount of gWX.
How to claim income (WX tokens) for LP tokens staking
To get WX tokens from staking LP tokens, open the WX Network app, log into your account, and then click on the "Pools" button. After that, select the pool you have invested in your liquidity (for example, WX/WAVES) and click the "Deposit" button.
There is an area on the right side of the screen where you can transfer the unclaimed reward to your balance. In the "Unclaimed reward" field, the amount of WX tokens is displayed, which is credited to you as income for LP token staking. To transfer this amount to the balance of your account, click on the Claim button.
Note: your reward for the pool's tokens staking is automatically claimed during the withdrawal of investments from the pool, during the pool's LP tokens withdrawal from staking, and during the completion of pools weights voting.
How to withdraw tokens from the pool
To withdraw liquidity (tokens) from the pool, open the WX Network app, log into your account, and then click on the "Pools" button. After that, select the pool from which you want to withdraw tokens (for example, WX/WAVES) and click the "Deposit" button.
On the pool page, open the "Withdraw" form. In this form, choose whether you want to withdraw using one token or two tokens. Then, select which LP tokens you want to use for withdrawal:
1 - LP tokens that are on your account balance (not in staking),
2 - LP tokens that are in the staking,
Note: when using the 2nd option, there is no need to pre-withdraw LP tokens from the staking. LP tokens unstaking and investments withdrawal from the pool are carried out in one step.
Then, enter the amount of LP tokens into the "I send ---" field, and in the "I receive" field the number of pool tokens that you receive will be displayed. After that, it will be enough to click on the Withdraw button to receive the invested tokens to your account balance.
Note: for the one-token withdrawal is charged Exchange fee (0.15%).
How to stake LP tokens
If you unmark the checkbox "Stake --- straight after the deposit" during the tokens investment, you, probably, will need to stake LP tokens in the future. The same situation may occur if you bought LP tokens in the spot market.
To stake LP tokens, open the WX Network app, log into your account, and then click on the "Pools" button. After that, select the pool from the list whose LP tokens are on your account balance (for example, WX/WAVES) and click the "Deposit" button.
In the tab that appears, select "Stake" button, enter the amount of LP tokens that you want to submit to the staking and click the "Stake" button.
Note: if liquidity pool does not have weight, it is impossible to stake LP tokens of this pool.
How to unstake LP tokens
To unstake LP tokens, open the WX Network, log into your account, and then click on the "Pools" button. After that, select the pool, the LP tokens of which you want to unstake (for example, WX/WAVES), and click the "Deposit" button.
Then select the "Unstake" menu, enter the amount of LP tokens you want to pick up from staking and click the "Unstake" button.
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tags*: liquidity pools wx invest passive income vote earn