Ubricoin has several liquidity pools on Uniswap and we are going to look at how to create a liquidity pool with UBN.
To get started, you need to have:
- A crypto wallet such as Metamask, Trust wallet etc.
- Ubricoins in your wallet.
- Another crypto currency that you wish to pair UBN with such as BTC, ETH, USDT, etc. In this example we will be using ETH.
How to create a liquidity pool with UBN in Uniswap
This is a step-by-step guide on how to create a Ubricoin liquidity pool in Uniswap.
- You first need to go to Uniswap’s official website and click on the Launch App button which brings you to app.uniswap.org.
- Connect your wallet to Uniswap by clicking on Connect Wallet which prompts a list of wallets to pop up. You can then select the wallet you want to connect which should contain both UBN and ETH. Some wallets may require you to choose an account in the case that you have multiple accounts in the same wallet. Confirm the connection to Uniswap in the wallet to successfully connect.
- Your balance and wallet address should display at the top of the page after successful connection.
- Select Pool from the Uniswap interface to become a liquidity provider.
- Select + New Position and select a pair. In this case we are using UBN, ETH. Then select a pool type based on your preferred liquidity provider fee which is displayed in different percentage tiers. Liquidity providers take on minimal price risk in these pools, and traders expect to pay minimal fees therefore the 0.3% fee tier is most preferred. The 1% fee tier is designed for situations where liquidity providers take on extreme price risk.
- Next you should set a Price Range considering the degree to which you think prices will move over the course of your position’s lifetime. You should however know that if the price goes outside your range you will not earn trading fees until it returns to your chosen range.
- Enter the value in one of the Deposit Amounts boxes and the other box will be automatically filled. Then click on Approve ETH. Confirm the transaction in your wallet if prompted.
- Click on the Preview button to review the details and you can edit if need be.
- Lastly, click on Add to confirm the transaction.
You have now provided UBN liquidity for Uniswap traders. You can earn fees and receive the LP tokens in your wallet.
Benefits of Creating Liquidity
Blockchain startup projects that want to release their tokens directly to the market and attract the attention of a wide audience can do so with Uniswap. There are no listing fees and no bumpy vetting processes before a coin or token can be listed for trading. Setting up a liquidity pool on Uniswap is relatively easy and connecting your wallet to Uniswap is quick; all you need is a supported Ethereum wallet. This makes it an ideal decentralized exchange for Liquidity Providers (LPs) / investors and traders. Its popularity is well deserved.
One benefit of setting up a liquidity pool and providing liquidity to the market is that you can earn by collecting trading commissions. Trading commissions are distributed among the liquidity providers proportionally to their share in the pool. When you deposit UBN tokens into a liquidity pool smart contract, you receive pool tokens which can be liquidated at any moment.
The pool tokens can also be collateralized with platforms such as Unbound Finance, a decentralized lending protocol, and in return a stablecoin can be borrowed. The minted stablecoin can be then used to increase the existing earnings from liquidity provisioning by using them for trading on DEXs.
Providing liquidity gives traders an opportunity to earn by exploiting price discrepancies between Uniswap’s price quotes and the rest of the market. This means that with a good trading strategy, you can take advantage of an arbitrage opportunity to make money from UBN. In conclusion, liquidity pools allow you to put your Ubricoin tokens to use and earn passive income. Users on Uniswap are incentivized to add liquidity to trading pools by rewarding them with the fees generated when other users trade with those pools.