Providing liquidity is a process of depositing tokens into a liquidity pool on a decentralized exchange (DEX) to facilitate trading of those tokens with other users. When you provide liquidity, you contribute to the supply of tokens available for trading on the DEX, and in return, you earn a share of the trading fees collected by the DEX from trades made with the tokens in the pool.
This creates a win-win situation for both liquidity providers and traders, as the liquidity providers earn rewards for their contribution, while traders can access a deeper pool of tokens to trade with. However, providing liquidity also comes with risks, such as impermanent loss, which can affect the value of your tokens in the pool. It’s important to do your own research and understand the risks involved before providing liquidity.
In this article you will learn how to provide liquidity for $POOLX token on Pancakeswap DEX
Select the amount of $POOLX that you want to provide for liquidity. Be aware that you will need to provide on the other hand $BUSD equal for the amount of $POOLX you provide for liquidity.
Press the ‘Enable POOLX’ button and confirm the transaction in your wallet.
Press the ‘Add’ button and then ‘confirm supply’. After you do so, confirm the transaction in your wallet.
To understand more about providing liquidity and the types of liquidity you can provide you can read more about it on Pancakeswap guide.