How to Add Liquidity
Learn how to provide liquidity to trading pools and earn fees from token swaps.
What is Liquidity?
Liquidity providers (LPs) deposit tokens into pools that enable other users to trade. In return, LPs earn a share of trading fees generated by the pool.
Before Adding Liquidity
- Connect your wallet to Moondraft
- Have equal values of both tokens you want to provide
- Keep some native tokens (SOL/ETH) for transaction fees
- Understand impermanent loss risks
Adding Liquidity Steps
- Navigate to Liquidity - Click "Liquidity" in the main menu
- Select Pool - Choose an existing pool or create a new one
- Select Token Pair - Pick the two tokens for your pool
- Enter Amounts - Input how much of each token to deposit
- Review Pool Share - Check your percentage of the total pool
- Approve Tokens - Allow the contract to access your tokens
- Add Liquidity - Confirm the transaction in your wallet
- Receive LP Tokens - Get pool tokens representing your share
Creating a New Pool
If no pool exists for your token pair:
- Click "Create Pool"
- Set the initial price ratio between tokens
- Add initial liquidity (minimum amounts required)
- Pay pool creation fee
- Enable trading for other users
Understanding Risks
Impermanent Loss
If token prices change significantly, you may receive less value when removing liquidity compared to simply holding the tokens.
Earning Rewards
- Trading Fees - Earn 0.3% of every swap in your pool
- LP Staking - Some pools offer additional rewards for staking LP tokens
- Liquidity Mining - Participate in reward programs for specific pools
Removing Liquidity
To withdraw your tokens:
- Go to your liquidity positions
- Select the pool to exit
- Choose percentage to withdraw (25%, 50%, 75%, or 100%)
- Confirm transaction
- Receive your tokens plus earned fees
Pro Tip: Start with smaller amounts and established token pairs to learn how liquidity provision works before providing liquidity to new or volatile tokens.