💰Liquidity Provision

This guide will help you understand how to provide liquidity on Dozer Finance and earn rewards.

Understanding Liquidity Provision

What is Liquidity Provision?

Liquidity provision is the process of contributing tokens to trading pools, which enables trading for other users on the platform. As a liquidity provider, you'll earn rewards from trading fees while playing a crucial role in supporting market efficiency.

Benefits

By providing liquidity, you'll earn 0.3% in trading fees from all trades in your pool. This not only provides you with a steady income stream but also helps support the Dozer ecosystem, enables more efficient markets, and allows you to actively participate in the platform's growth.

Getting Started

Prerequisites

Before getting started, ensure you have a Hathor Wallet connected to the testnet and sufficient amounts of both tokens you wish to provide as liquidity. You should also have a good understanding of impermanent loss and basic knowledge of how liquidity pools work.

Finding Pools

1. Navigate to Pools section

2. Browse available pools

3. Review pool statistics:

   • Total liquidity

   • Volume

   • Fee earnings

   • Your potential share

Adding Liquidity

Step-by-Step Process

1. Select your pool

2. Choose "Add Liquidity"

3. Enter amount for first token

4. System calculates second token amount

5. Review your contribution

6. Approve transaction in wallet

Important Considerations

When adding liquidity, you'll need to maintain the correct token ratio for the pool. Make sure to account for slippage and understand the minimum amounts required. Review any associated fees and carefully check your potential pool share before confirming your contribution.

Managing Your Position

Monitoring

1. View your active pools

2. Track earned fees

3. Monitor pool share

4. Check current values

Liquidity Management

The liquidity position is registered inside the Liquidity Pool nano contract, so you can view your position in the Dozer in two ways:

• Inside the pool page, in "My Positions" section

• In Pools Table, you can acess "My positions" tab

Removing Liquidity

Withdrawal Process

1. Go to Pools section

2. Select active pool

3. Choose "Remove Liquidity"

4. Enter LP token amount

5. Review token returns

6. Confirm transaction

7. Receive tokens back

Considerations

• Check withdrawal timing

• Account for price changes

• Verify returned amounts

• Monitor transaction status

Understanding Risks

Impermanent Loss

• Price change effects

• How to calculate

• Risk management

• Mitigation strategies

Market Risks

Providing liquidity comes with exposure to market risks including price volatility and pool balance changes. You should monitor volume fluctuations and overall market conditions that could affect your position.

Best Practices

Before Adding Liquidity

1. Research the pool

2. Understand the risks

3. Check pool metrics

4. Have sufficient tokens

5. Plan your strategy

Active Management

1. Monitor your position

2. Track earned fees

3. Assess market conditions

4. Plan exit strategies

Rewards and Earnings

Fee Structure

Liquidity providers earn a 0.3% fee from all trades in their pool, distributed proportionally based on their pool share. These fees accumulate automatically and can be tracked in real-time through the platform interface.

Viewing Earnings

1. Check pool interface

2. Monitor fee accumulation

3. Track total returns

4. Calculate APR

Advanced Topics

Pool Analysis

Successful liquidity provision requires a deep understanding of pool metrics including depth, volume patterns, and potential fee earnings. Consider the market impact of your positions and use this analysis to inform your strategy.

Strategy Development

• Position sizing

• Entry/exit timing

• Pool selection

• Risk management

Troubleshooting

Common Issues

• Transaction failures

• Price impact issues

• Slippage problems

• Balance discrepancies

Solutions

• Check wallet connection

• Verify token approvals

• Review pool status

• Contact support if needed

Next Steps

• Review Trading Guide

• Understand MEV Protection

• Check Troubleshooting if needed