Add Liquidity (How it works)

How does Add Liquidity work on Enigma?

Below, we'll provide an example of how it operates and the potential for Enigma users to expand their income opportunities.

Let's say you decide to add liquidity to the PEPE-ETH pool on Enigma Swap. You contribute 10 PEPE tokens and an equivalent value of 1 ETH to the pool. In return, you receive liquidity tokens representing your share of the pool, let's call them L-PEPE-ETH tokens.

Now, whenever someone makes a trade between PEPE and ETH on the platform, they pay a small fee. Let's say there's a 0.3% fee for each trade. If someone swaps 100 PEPE for 0.01 ETH, they pay a fee of 0.00003 ETH.

These fees accumulate over time and are added to the liquidity pool. Since you're a liquidity provider, you're entitled to a portion of these fees based on your share of the pool. So if you own 10% of the total liquidity in the PEPE-ETH pool, you would receive 10% of the fees collected from trades.

Please note: The fee percentages provided in this example are subject to change.

Add Liquidity