By adding liquidity to a pool on Pancakeswap, you earn a portion of all fees from trades in the pair that you provide liquidity for, for example wAUDAX/USDT.
This article explains how you can add liquidity to the wAUDAX — USDT pool on Pancakeswap. You will need both wAUDAX and USDT in your wallet.
We will be using the Metamask wallet in this example. You need to ensure you have some BNB in your wallet for fees.
1. Go to https://pancakeswap.finance
2. From the navigation area to the left, click Trade, then select Liquidity from the dropdown:
3. On the next screen, click Add Liquidity:
4. A page as shown below will appear. The ‘From’ field may display BNB, as shown below. Click the dropdown arrow to enter wAUDAX.
To enter wAUDAX, you will need to enter the contract address, which is:
Once you paste the contract address into the field, PancakeSwap should automatically pick up wAUDAX. BE SURE you click on ‘(Add)’ — this will ensure that PancakeSwap will remember wAUDAX, and you won’t need to enter the contract address again. Then click on wAudax.
5. Enter the amount of wAUDAx you want to supply. The equivalent USDT will be filled in as shown below.
You may need to approve USDT — click Approve USDT and click Confirm in your Metamask wallet. Then click Supply.
From the next screen, review and click Confirm Supply as shown below. This screen lets you know the amount of wAUDAX/USDT Pool Tokens you will receive for providing this liquidity.
6. Click Confirm in your Metamask wallet. Once your transaction is confirmed, your liquidity is added to the pool.
Impermanent loss is an important concept to understand before adding liquidity to any pool. The Binance Academy describes impermanent loss this way:
Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit.
Providing liquidity can be profitable — but we recommend that you understand the concept of impermanent loss before proceeding to provide liquidity.
Learn more about this important concept at the Binance Academy.