For LPs
A guide to providing liquidity on Rooster.
Last updated
A guide to providing liquidity on Rooster.
Last updated
Liquidity Providers (LPs) supply liquidity to a pool on Rooster for traders to swap against. This means the LP's tokens are used for swaps; i.e., by providing liquidity, the LP agrees to let the AMM sell their tokens to traders. In return, the LP receives ROOSTER emissions from the protocol.
Each pool consists of two tokens. In general, an LP supplies quantities of both tokens (although in some cases they may provide only one) and the actual ratio of the tokens depends on the distribution the LP selects.
An LP’s liquidity is distributed using a series of bins that correspond to different price ranges in a pool. Prices in a pool are a reflection of the ratio between the two tokens in that pool. At any one time, only one bin in a pool is active. This means that swaps are actively occurring at that price point using the liquidity in that bin. As the ratio of tokens in the pool changes, the price will move to a new bin, making that the active bin.
Navigate to the and select the pool to which you want to add liquidity. In order to add liquidity to a pool, you will need to hold at least one of the two pool tokens in your wallet. You can choose a pool from the list that includes tokens you already hold, or go to the to acquire tokens you will need for a pool.
From the list, click on a pool's Deposit button to go to the New Deposit page. Here, you will select how many tokens you will add and what distribution will be used for your liquidity.
Start by choosing between Flat or Exponential as your initial distribution. If you select Flat, you can choose between three default distributions: Narrow, Common, and Wide. These three options will spread your tokens across progressively wider distributions relative to price.
Once you have chosen the initial distribution, you can use the Customize Distribution window to make further adjustments. This is as simple as using your cursor to grab the top of a bin and drag it up or down to alter its size relative to other bins in the distribution.
Now you can use the numeric inputs under Token Amounts to choose how much liquidity to add. The ratio of tokens required depends on the pool's current liquidity reserves, the price, bin width, and the distribution you have chosen. When you input an amount for one token, the UI will calculate the correct amount of the other token needed for your deposit.
Take a moment to review your deposit details. If everything looks correct, click the Deposit button to proceed with your deposit.
The UI will prompt you to approve any tokens that require it. Once are all tokens are approved, you will be able to proceed with the deposit. You will be asked to confirm the transaction in your connected wallet. Once you confirm it, the transaction will be submitted to the blockchain. After a short wait, you will receive a notification that the deposit was successful.
You can withdraw tokens you have deposited in Rooster from the . Please note, that as a result of trading activity you may not withdraw the same ratio of tokens that you initially deposited.
