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Provide liquidity

Decentralized exchanges (DEXs) rely on automated market makers (AMMs) to power their swap functionalities. An AMM uses liquidity pools to automatically facilitate direct peer-to-peer trades. Liquidity pools consist of an equal value of two tokens in a trading pair. After each trade, the pool itself is automatically rebalanced, and the price per token is updated.

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Providing liquidity is a moderately advanced feature and is not recommended for beginner users.

On ShibaSwap, users can provide liquidity and receive rewards for their participation as a Liquidity Provider (LP). To add liquidity to ShibaSwap and start earning rewards, simply navigate to the Liquidity Pools page.

From here, users can either select a pair from the table to add liquidity or click on Create Pool button to provide additional liquidity to any existing pool or create a new one.

Once an option is selected, you will be presented with a screen that functions almost identically to the Swap page. To add liquidity, simply select the two tokens you wish to add to liquidity and the amount.

  1. Base token: This is where you select your base token for your liquidity pair. Selecting ETH will automatically wrap it into WETH for the pool so you do not need to wrap it yourself.

  2. Second token: This is where you select the other token for your liquidity pair. This can be anything you like, meaning users can create their own custom pools at any time. To add to an existing pair, make sure you are importing the correct base token and second token!

  3. Pool info: This is where information on the pool will be populated, including pool value, your share of the pool, and the comparative price of each token.

  4. Confirmation button: Once you are ready, select this to start the transaction in your wallet.

  5. Transaction settings: Contains various advanced options.

Once the transaction is complete, you will be awarded SSLP tokens representing your share of the liquidity pool. You are entitled to your proportional share of the pool which may change over time, potentially exposing the end user to impermanent loss. To remove your liquidity, simply return to the Liquidity pools page, connect your wallet, and remove your liquidity by clicking the pair in the menu.

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Don't see a pool you joined? Click the Import It button at the bottom of the page to import your SSLP tokens.

Liquidity Provider Rewards​​

In most cases, simply holding the SSLP tokens will allow the Liquidity Provider to earn their share of the fees generated by that trading pair. However, ShibaSwap takes this further and allows Liquidity Providers to receive reward tokens as an additional incentive. Rewards for providing liquidity are covered in detail on the Woof page of this wiki immediately following this page. Click the next page button below to learn about how to earn BONE rewards for providing liquidity.

Advanced Settings​​

The transaction settings menu allows the user to customize various aspects of their transaction.

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These advanced features should be used by experienced traders. We do not recommend that beginner users change these settings.

  1. Slippage tolerance: This is the allowed price change before a transaction is canceled and reverted. Setting the tolerance too low will result in failed trades, as the market price of tokens is constantly changing. Setting this number too high may result in over-payment due to frontrunning bots. The default setting is 0.5%.

  2. Transaction deadline: This is the maximum amount of time allowed before a transaction is canceled. Selecting high gas or above can help alleviate this issue by making sure your transactions are completed in a timely manner. The default setting is 20 minutes.

  3. Toggle expert mode: By default, ShibaSwap does not allow for extreme slippage tolerances as there is virtually never any reason to use it. However, if desired, a user can enable expert mode to allow the trading of ultra-high-risk trades at the expense of protection from bot attacks. This setting is extremely dangerous and should only be enabled for very specific use-cases. We do not recommend users enable this feature. The default setting is off.

  4. Disable multihops: This restricts ShibaSwap to swap only between direct liquidity pairs only. This restricts multi-step routing for trading between tokens without a direct pair. With multihops disabled, users may find that they are unable to trade certain pairs, or that price impact is much higher than it would be with multihops enabled. The default setting is off.