Create a pool
Introduction
Creating a liquidity pool is a fundamental way to participate in decentralized finance (DeFi). By providing liquidity, you contribute pairs of tokens to a pool that other users can trade against. In return, liquidity providers (LPs) typically earn fees from the trades that occur in their pool. This guide will walk you through the process of creating a new liquidity pool on our platform.
Prerequisites
Before you begin, ensure you have the following:
A Compatible Aptos Wallet: You'll need a wallet that can interact with the Aptos blockchain. Some popular choices supported by our platform include:
Petra Wallet
Aptos Connect
When you click the "Connect Wallet" button on our platform, you'll see a list of all supported wallets.
Sufficient Tokens: You need to have the tokens you intend to pair in your wallet. You will be depositing these into the pool. For example, if you want to create an APT-USDC pool, you'll need both APT and USDC in your wallet.
APT Tokens for Gas Fees: All transactions on the Aptos blockchain require APT for gas fees. These are network fees used to process your transaction. Make sure you have a small amount of APT in your wallet to cover these costs.
General Pool Creation Steps
Our platform provides a user-friendly interface to guide you through creating a new liquidity pool. It's a straightforward process presented as a series of steps.
Here's a general overview of what you'll do:
Navigate to the Create Pool Page: Find and click on the "Pools" or "Liquidity" section in the platform's navigation menu, and then look for an option like "Create Pool" or "New Position."
Select Pool Type: You'll be asked to choose the type of pool you want to create. Common options include:
Volatile/Standard Pools: For typical token pairs.
Concentrated Pools: Allowing you to provide liquidity in a specific price range.
Stable Pools: Optimized for tokens that have very similar prices (like stablecoins). Each type has different characteristics and potential fee earnings.
Select Tokens: Pick the two tokens you want to provide as a pair for the pool. You'll be able to select these from a list of available tokens that are in your connected wallet or supported by the platform.
Configure Pool Parameters: Depending on the pool type you selected, you'll need to set a few parameters. This might include:
Fee Tier: This is the percentage fee traders will pay to use your pool's liquidity. You'll typically choose from a few options.
Initial Price (for Concentrated pools): If you're creating a Concentrated pool, you'll set the starting price for your liquidity.
Price Range (for Concentrated pools): You'll define the specific price range (minimum and maximum price) where your liquidity will be active.
Amplification Factor (for Stable pools): For Stable pools, this setting fine-tunes how the pool handles trades between the paired tokens. You might see presets or an option to set a custom value.
Input Deposit Amounts: Specify how much of each of your selected tokens you want to deposit into the pool. The interface may show you the current ratio or automatically calculate one amount if you input the other.
Review and Create: The platform will show you a summary of your pool's configuration. Carefully review all the details. You'll then need to approve the use of your tokens (a transaction in your wallet) and finally confirm the creation of the pool (another transaction).
Follow the on-screen prompts at each stage, and your new liquidity pool will be ready!
Understanding Different Pool Types
Our platform offers different types of liquidity pools, each designed for specific kinds of token pairs and trading strategies. Here’s a closer look to help you choose the right one:
1. Volatile Pools (Often called Standard or Classic Pools)
What are they? These are the most common type of pool, suitable for pairs of tokens where prices are expected to move and change ("volatile"). If you're not sure which to choose, this is often a good starting point for many common token pairs.
Best for:
General token pairs (e.g., a project token paired with APT or a stablecoin).
Newly launched project tokens.
Key things to set:
Token Pair: The two tokens you want to provide.
Fee Tier: You'll select a fee percentage (e.g., 0.05%, 0.3%, 1%). This is what traders pay to use your liquidity, and it's how you earn rewards. A higher fee might be suitable for more volatile pairs, while a lower fee can attract more traders to less volatile pairs.
How to create one (general steps):
On the "Create Pool" page, select "Volatile" (or "Standard," "Classic," etc. – the naming may vary slightly) as the pool type.
Choose the two tokens you want to pair from the dropdown menus.
Select the fee tier that you think is appropriate for your chosen pair.
Enter the amounts for each token you wish to deposit. The platform will usually show you the ratio, which sets the initial price for trading in the pool.
Follow the prompts to approve spending your tokens (a wallet transaction) and then confirm the final pool creation (another wallet transaction).
2. Concentrated Liquidity Pools
What are they? These pools are a bit more advanced. They let you provide your tokens within a specific price range that you choose. If the trading price stays within your range, you can earn more fees with the same amount of capital compared to a Volatile pool. However, if the price moves outside your chosen range, your liquidity won't be used, and you won't earn fees until it comes back in range.
Best for:
Token pairs where you have a good idea of their likely trading range.
Stablecoin pairs (e.g., USDC-USDT), although our "Stable Pools" might be even more optimized for these.
Situations where you want to make your capital work harder within a defined price band.
Key things to set:
Token Pair: The two tokens.
Fee Tier: Similar to Volatile pools, you'll select a fee.
Initial Price: You'll need to set the starting price at which your liquidity will be provided. The interface will guide you, often pre-filling with the current market price, which you can adjust.
Price Range (Min Price & Max Price): This is the core feature. You'll set a minimum price and a maximum price. Your deposited tokens will only be used for trades happening between these two price points.
How to create one (general steps):
Select "Concentrated" as the pool type.
Choose your two tokens and the fee tier.
You'll then be prompted to set the Initial Price for your liquidity.
Next, you'll define your Price Range by entering a Min Price and a Max Price. The interface may provide tools or charts to help you visualize this.
Enter the amounts for each token you wish to deposit. The amounts you can deposit effectively might change based on the price range you've selected relative to the current market price.
Approve token spending and confirm the pool creation via your wallet.
3. Stable Pools
What are they? These pools are specially designed for pairs of tokens that should ideally always have very similar values, like two different stablecoins (e.g., USDC and USDT) or different versions of the same asset (e.g., wrapped BTC and BTC). They use a special mechanism to allow for very low slippage (price impact) when people trade these tokens.
Best for:
Pairs of stablecoins (e.g., USDC-DAI).
Pairs of assets that are pegged to each other (e.g., different liquid staking derivatives of APT).
Key things to set:
Token Pair: The two stable or similarly-priced tokens.
Fee Tier: Fee tiers for these pools are usually very low (e.g., 0.01% or 0.02%) because the risk of price moment is lower and the aim is to facilitate high volume trading with minimal cost.
Amplification Factor (often called 'A'): This is a special setting for Stable pools. A higher 'A' value makes the pool assume the tokens are very tightly pegged, allowing for larger trades with less price impact around their usual 1:1 exchange rate. A lower 'A' value is for tokens that might have a bit more price fluctuation between them. The interface might offer pre-set options (like "Fiat-Pegged Stablecoins") or let you choose a custom value.
How to create one (general steps):
Select "Stable" as the pool type.
Choose your two stable (or pegged) tokens.
Select an appropriate (usually very low) fee tier.
You'll then be asked to set the Amplification Factor. Review any provided presets or information to help you choose.
Enter the amounts for each token you wish to deposit.
Approve and confirm the transactions in your wallet.
Choosing the right pool type and parameters is key to successfully providing liquidity. If you're unsure, start with small amounts or use any simulation tools the platform might offer.
Important Considerations When Creating a Pool
Creating a liquidity pool can be a way to earn rewards with your crypto, but it's essential to understand the potential risks and key factors before you start:
Understanding Impermanent Loss: This is a unique risk for liquidity providers. Imagine the value of your tokens changes while they're in the pool. Impermanent loss is the difference in value between keeping your tokens in the pool versus just holding them in your wallet. It's especially something to be aware of with "Concentrated Liquidity Pools" if the market price moves outside the range you selected. It’s a good idea to research "impermanent loss" to understand it fully.
Choosing the Right Fee Tier: When you create a pool, you'll select a fee tier (e.g., 0.05%, 0.3%, 1%). This is the percentage that traders pay to use your pool, and it's how you earn rewards.
For volatile token pairs (where prices can change a lot), a higher fee tier might be chosen to help offset the higher risks.
For stable token pairs (like two stablecoins) or pairs that trade in a very tight price range, lower fee tiers are common to encourage more trading.
Think about how much you expect the tokens' prices to change and how much trading activity the pair might get.
Setting Your Price Range (for Concentrated Pools): If you're creating a "Concentrated Liquidity Pool," you'll choose a specific price range (a minimum and maximum price) for your deposit.
A narrower range means your funds are focused. You could earn more fees if the price stays in that narrow band, but if the price moves out, your deposit won't be actively earning fees.
A wider range is generally less risky in terms of your deposit becoming inactive, but your earnings might be less concentrated.
Setting the Amplification Factor (for Stable Pools): If you're creating a "Stable Pool" (usually for stablecoin pairs), you'll encounter a setting called the "Amplification Factor" (or "A" factor).
A higher 'A' factor tells the pool that the two tokens are very, very similar in price (like two US dollar stablecoins). This helps make trades between them very efficient with low price impact.
A lower 'A' factor is for "stable" tokens that might still have some small price differences between them. The interface may offer suggestions or pre-set values for this.
Gas Fees: Remember that every transaction on the Aptos blockchain, like creating a pool or depositing tokens, requires a small amount of APT to be paid as a network fee (often called a "gas fee").
Choosing Your Tokens Wisely: Make sure the tokens you're planning to add to a pool are from projects you trust and understand. Adding tokens from very new, unknown, or highly unstable projects can be very risky.
Initial Deposit Size: The first amounts of tokens you put into a new pool (the "initial liquidity") are important. If a pool starts with very small amounts, the first few trades can cause large price swings ("high slippage").
Profits are Not Guaranteed: While you can earn fees from trading activity in your pool, there's no guarantee of profit. Earnings depend on how much trading happens in your specific pool.
Always do your own research (DYOR) before providing liquidity to any pool.
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