A Step-by-Step Guide to Providing Liquidity on Uniswap and Earning 60% per Month
Liquidity is needed for a healthy decentralized ecosystem, that’s why Earnbase rewards liquidity providers with ENB.
Liquidity is just two tokens placed into a pool. Anyone can deposit tokens and also remove their tokens whenever they want. When people trade, they swap one of these tokens for the other. When there’s a lot of these tokens in the pool, it means users can swap tokens at the best possible price, and that’s good for everyone.
Liquidity providers (those that add tokens to the pool) earn the 0.3% trading fee that traders pay for every swap and they earn ENB when they deposit their UNI-V2 tokens on our app.
UNI-V2 tokens are what you receive when you add liquidity to a Uniswap pool. These tokens represent your share of the pool.
Rewards are proportionally distributed, so if your share is 10% of the total deposited tokens you will earn 10% of all rewards.
Example: If the liquidity value staked in our Uniswap pool is around $70K (which it currently is) and you add $7.7K worth of liquidity, your share will be 10% and you will therefore earn 10% of all rewards. 10% will at least give you 1,070 ENB each month. With the current ENB price of $4.35 you would earn $4,654 each month by only providing $7.7K worth of liquidity. That’s 60% per month.
Does that sound too good to be true? That’s just the benefit of being early! The current rewards are sky-high. As more people join and provide liquidity, the percentage will decrease.
Excited to get started? Let’s jump in!
First you need a supported wallet
We recommend Metamask (https://metamask.io). Download the Metamask app to your smartphone or install Metamask to your browser. If you have a Trezor or Ledger wallet that you’d like to use, you should still get Metamask which then will allow you to connect your Trezor/Ledger through it.
This guide will be made on a desktop with the Metamask wallet, the steps showing the wallet actions will look different if you use a different wallet. The apps will also look a bit different if you’re using a smartphone.
Once you have your wallet set up and have both ENB and ETH in it (you need both tokens to add liquidity)…
Uniswap pools are 50/50, so the total of ENB and the total of ETH you deposit must have the same USD value.
If you don’t have ENB yet, you can buy it here: https://app.uniswap.org/#/swap?inputCurrency=ETH&outputCurrency=0xa6fb1df483b24eeab569e19447e0e107003b9e15
Then visit https://app.earnbase.org and connect your wallet.
2. Click the link that says ”here”.
3. That link opened the page below on Uniswap. Now click ”Add Liquidity”
4. Input the amount of ENB or ETH you’d like to add. Both tokens will be added but the app will automatically calculate the correct amount of the second token. This is because you can only add an equal amount in USD value of each token.
Then click ”Approve ENB”.
5. Allow Uniswap to spend your ENB.
6. Wait until the above transaction is completed and then click ”Supply”.
7. Click ”Confirm Supply”.
8. Confirm the transaction in your wallet.
9. Wait until the confirmation is completed. Then go back to the app.earnbase.org tab (you may need to refresh the page if your UNI-V2 tokens aren’t showing), and click ”Deposit”.
10. You can manually input the amount of tokens you’d like to deposit or just click the balance to automatically fill the field with your entire balance, and then click “Deposit”.
11. Allow the Earnbase app to spend your UNI-V2 by confirming in your wallet.
11. Wait for the approval to be completed and then confirm the transaction to complete the deposit.
That’s it, well done! The UNI-V2 tokens you deposited will now show up under ”Deposited” and you will begin earning ENB automatically.
Due to the risk of impermanent loss and transaction fees, it‘s recommended to not remove your liquidity for at least 3 months. It’s better the longer you leave them. The ENB rewards you earn will very likely be worth much more than any impermanent loss, but if you’re not sure then just let your tokens stay in the pool.
Impermanent loss is something all liquidity providers should be aware of, here’s a good video explaining it: https://www.youtube.com/watch?v=8XJ1MSTEuU0&ab_channel=Finematics
A tip to maximize your earnings
While your UNI-V2 tokens are deposited and earning you ENB every day, you can claim your ENB rewards at any time and deposit them into the governance pool to earn even more ENB.
How to remove liquidity (you will stop earning ENB if you do this)
- Click “Withdraw” or “Claim rewards and withdraw” (the only difference is that the rewards will stay there until you claim them).
2. Click the link that says “here”.
3. That link opened the page below on Uniswap. Now click “Accounts”.
4. Paste your wallet address in the top field and click “Load Account Details”.
5. Scroll down to the Positions section and click “Remove”
6. Select how much you want to remove and click “Approve”
7. Sign the approval in your wallet.
8. Once signed, click “Remove”.
9. Click “Confirm”.
10. Confirm in your wallet.
Wait for the transaction to clear and that’s it.
If you get stuck somewhere, join our Discord and post in the #support channel: https://discord.gg/bRRBbN4
Earnbase is a user-friendly, all-in-one decentralized platform to earn, save and swap tokens. Made by regular people for regular people. DeFi is super complicated and barely understandable… we are simplifying that complicated mess and making it easy for anyone to take part.