Solanium.io EZ Guide — Liquidity Providing On Raydium
Welcome to Solanium’s easy guide series. Throughout our journey we will be releasing a number of guides to help our growing community to participate in the myriad of wonderful incentive reward schemes that form the backbone of all token protocols.
Today we will be discussing how to become a liquidity provider with Solanium on Raydium.
An Introduction To Liquidity Providing
Adding liquidity is a very important to all protocols. It usually carries great rewards for both the liquidity provider and the token protocol, but it also adds to the general appeal of trading the token, which helps the price. The rewards for providing liquidity can vary, but in most cases the protocol will pay the liquidity provider in extra tokens over the period of time that the liquidity is made available. There is also a risk of permanent loss that goes with all liquidity providing, which we will touch on as well.
Impermanent loss is a loss of funds that a user will incur when they provide liquidity. It happens when the price of one asset (SLIM) differs relative to another (SOL) and doesn’t return, which often happens. There will always be some IL, the second the pricing between the pairs shifts too much. Most commonly, the compensation comes from trading fees & staking incentives. Will go into the rewards at the end.
Adding SLIM Liquidity To The Raydium Pool
To begin adding liquidity, you must have enough Solana (SOL) in your wallet to match the amount of SLIM token value that you wish to stake.
1. Choose to add liquidity for your desired pair on Raydium (click here). Alternatively, you can add the contract to locate the token: xxxxa1sKNGwFtw2kFn8XauW9xq8hBZ5kVtcSesTT9fW
2. Use the interface to add the desired amount of liquidity and Raydium will give you LP tokens for that specific pair.
3. You can then navigate to the vault page and click on your desired pair.
When done correctly, the LP tokens will show up in the “Wallet Balance” column in your Solanium wallet and you will be able to deposit. Once deposited, the funds will appear in the “Deposited” Column.
Currently, with the platform still in beta, the rewards for staking or providing liquidity are paid in xSLIM. They will become visible in the sidebar of the Solanium wallet interface as they accrue. The reward is a 2.5x bonus in xSLIM stake for a full term of one year staked.
The above image shows the 2x multiplier which is available for 72 hours from the launch of the staking portal, and will end 11:59PM UTC 24 June. After that, the rewards return to 2.5x as usual.
The main utility of xSLIM is that these tokens are required to be held in order for investors to gain allocation in the exciting, upcoming launches on our new accelerator. We have a number of exclusive Solana launches to follow in the coming weeks. For those who are unfamiliar with the importance of xSLIM in our protocol, please refer to this article, which explains all about it.
More Incentives For The Roadmap
In our roadmap, we plan to reward LPs with an APY of 30–40%, in SLIM tokens, dropped directly to their wallets. Please keep an eye on our socials for further announcements regarding this program, and when it will be rolled out.