# Liquidity Pool

When you add your token to a liquidity pool, you will receive LP Tokens and a share of trading fees as a liquidity Provider.

## LP Tokens

Users will get Liquidity Provider tokens when depositing a token pair into a liquidity pool.&#x20;

For example, if you added **HEROES** and **RPG** into a liquidity pool, you would receive **HEROES-RPG LP** tokens.

The amount of LP tokens you can get depends on the portion of tokens you have added to the liquidity pool.

You can claim your funds at any time by withdrawing your liquidity.

## Liquidity Providers Earn Trading Fees

PonytaSwap will reward users who provide liquidity with a share of transaction fees when your liquidity pool is used by other people.

Whenever someone trades on PonytaSwap, the trader pays a 0.3% fee, of which 0.17% is added to the liquidity pool of the swap pair they traded on.

For example:

* There are 10 LP tokens representing 10 HEROES and 10 RPG tokens.
* 1 LP token = 1 HEROES + 1 RPG
* Someone trades 10 HEROES for 10 RPG.
* Someone else trades 10 RPG for 10 HEROES.
* The HEROES/RPG liquidity pool now has 10.017 HEROES and 10.017 RPG.
* Each LP token is now worth 1.00017 HEROES + 1.00017 RPG.

Please note that there are chances of impermanent loss for liquidity providers. By providing liquidity, you're taking a risk and have to be ready for both outcomes.

## How to Add/Remove Liquidity

Users can provide liquidity for any token pair on the Liquidity page and earn LP tokens and a share of trading fees by staking both tokens. The LP tokens can be used for further staking.

{% tabs %}
{% tab title="Adding Liquidity" %}
To add liquidity, you must commit a certain amount of token pairs. The minimum value ( in USD) of the two tokens will determine the limit of the liquidity you can provide.&#x20;

You can trade for any tokens you need. Please refer to our [How to Trade on PonytaSwap](https://ponytaswap.gitbook.io/ponytaswap/products/liquidity/broken-reference) guide.

In the following example, we will add liquidity using TZT and RPG.

1. Go to the **Liquidity** page.
2. Click **Add Liquidity**.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2F0zxXU9zG1as0hOePiB3q%2Fimage.png?alt=media\&token=52a52065-4b8b-431e-aad2-02691d0fe8af)

3. Select the liquidity token pair you want to add using the dropdown menu. Here, we take RPG and TZT as an example.
4. Enter an amount of one of the tokens. The other should be calculated and filled automatically (please note that an error will appear, and the button will be disabled if any of the tokens have insufficient funds. To proceed, a smaller amount must be entered).
5. Click **Approve RPG**. If you are adding liquidity against tokens other than RPG, you might need to click enable twice for each token in your pair Your wallet will ask you to confirm the action.
6. Click the **Supply** button when it becomes active.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FnOZUA1oFVqpLf3Sj8NPm%2Fimage.png?alt=media\&token=0f5022f0-77b4-4d55-a1b8-c2fe3d3605a6)

7. A confirmation window will pop up. Confirm the information by clicking **Create Pool & Supply.**

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FEjlrRxgQzAp0Ao2BLSmA%2Fimage.png?alt=media\&token=7039b2d4-feeb-42a7-aa47-394d1d272825)

8. **Confirm** in your Wallet.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FSrmbkPCgyqg40aBaeGkn%2Fimage.png?alt=media\&token=e62169a8-90b4-4071-80a6-e95d7eb5ae92)

9. Once completed, your LP token balance will be displayed under **Your Liquidity**.&#x20;

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2Fz8Vopt3k9MvRmIimaSA7%2Fimage.png?alt=media\&token=173b5d18-73e0-47ad-a65e-e203f9f5ce34)

10. Repeat the preceding procedures to add more liquidity or liquidity to different pairs.
    {% endtab %}

{% tab title="Removing Liquidity" %}
Removing liquidity is very easy on PonytaSwap.&#x20;

1. Visit the **Liquidity** page
2. Under **Your Liquidity,** select the liquidity token pairs you want to remove. Click **Remove**.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FH9zv4Ka70ZPA1jIlZnkS%2Fimage.png?alt=media\&token=178f932e-7ecd-4a34-a012-72286f828a07)

3. Use the buttons or slider to choose how much liquidity you want to remove. Choose **MAX** to remove all of your liquidity from this pair.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2F1R5bTXsLA4c1rtFsMiF0%2Fimage.png?alt=media\&token=9ea62958-389c-4d90-bef8-2a587e419a10)

4. Click **Enable**. A window will pop up with detailed information. Click **Confirm** to bring up your wallet.

&#x20;

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FJZOOXE7xkj79nq4OsF4E%2Fimage.png?alt=media\&token=3ac01333-67bf-44ab-938c-00ca0f039373)

5. Verify all the transaction details, and click **Confirm** in your wallet to proceed.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FN8L8MW2ZnkoK7qQR3AoA%2Fimage.png?alt=media\&token=6ea1f699-4f77-4b75-bd7a-31cffdfb4648)

6. The **Remove** button will light up. Click to proceed.
7. A window will appear showing the transaction is submitted. Click **Close**.

![](https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FIimSWcvnYv0WJGL069JP%2Fimage.png?alt=media\&token=939da838-a4bf-4ce2-bb5b-cfb7d6d46ce5)

8. You can click **View on RangersScan** to check this transaction. If you haven't removed all of your liquidity, your remaining liquidity value will be updated on **My Liquidity** page.

<figure><img src="https://1871265802-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2FFE2YIboXbeBUeQFDqmkS%2Fuploads%2FDaE3eH3quL0aE7l15xyq%2Fimage.png?alt=media&#x26;token=92d32005-da44-4864-9c6f-38f09d8928eb" alt=""><figcaption></figcaption></figure>
{% endtab %}
{% endtabs %}
