Providing Liquidity

How To Provide Liquidity

Liquidity provision is the heart of Pangolin V3’s system, allowing users to become LPs and earn fees (and extra rewards) by depositing tokens into the pools. In Pangolin V3, LPs have much more flexibility than in V2, so this section will guide you through the process and concepts of adding liquidity with concentrated ranges.

Adding Liquidity (Creating a Position)

What You’ll Need: Two tokens for the pair you want to provide liquidity for (for example, AVAX and PNG), in the appropriate ratio, and some AVAX for gas fees. It’s often easiest to provide liquidity when you already hold both tokens.

In v3, the key difference is that you need to specify the price range at which you want to provide liquidity. The interface will show the current market price of the pair for reference. You can set a Min Price and Max Price or select “Full Range” (which is the entire 0 to ∞ range like Uniswap v2, but less capital-efficient). A narrower range allows for higher capital efficiency, while a wider range behaves more like a traditional AMM LP. The interface will also indicate how much of your liquidity would be "in range" based on recent price volatility.

1

Navigate to the Pool Interface

On Pangolin’s app, go to the Pools section. Click “Add Liquidity”.

2

Select Token Pair and Fee Tier

Choose the two tokens you want to create a pool position for. If the pair already exists, you’ll see it; if not, Pangolin will allow you to create a new pool. Next, select the Fee Tier for your position. The interface may suggest a default fee tier, but you can change it based on your expectation of the pair’s volatility and trading activity. Remember, Pangolin’s dynamic fees can adjust the actual fee within that tier range, but this selection still determines the base fee and tick size for your position.

3

Set Your Price Range

Specify your price range by setting a Min Price and Max Price (or select “Full Range”), narrow the range for higher efficiency (keeping in mind your position may become inactive if the price moves out), optionally set one bound to the current price or one tick away for one-sided liquidity, and choose a reasonable range (e.g., ±20%) with the interface showing how much of your liquidity is “in range” based on recent price volatility.

4

Input Deposit Amounts

Enter the amounts of tokens you want to deposit. Once you set the range, Pangolin will calculate the required ratio of tokens for that range at the current price. For example, if you set a range symmetric around the current price, you will need roughly a 50/50 value split of the two tokens (similar to v2). If you skew the range above or below the current price, you might supply more of one token than the other. The UI will indicate how much of each token is needed. If you don’t have enough of one token, you can adjust the amounts or range until it matches your wallet balances. Pangolin will also show your expected pool token NFT details, like the amount of liquidity (a number L) you’ll be contributing.

5

Approve and Supply

If this is your first time adding liquidity for either token, you’ll need to approve that token for use by the Pangolin smart contract (this is an on-chain approval, done by clicking an “Approve [Token]” button and confirming in your wallet). After approvals, click “Supply” (or “Add Liquidity”) and confirm the transaction in your wallet. Adding liquidity is an on-chain action that will mint your LP position NFT and deposit your tokens into the pool. After a short moment, the transaction will confirm and your liquidity is now added.

What's next?

Once you’ve added liquidity, Pangolin will provide you a confirmation and show your new LP Position. You are now an LP in that pool between the price bounds you set. As trades occur in the pool, if the price is within your range, your liquidity will be used and you’ll earn a portion of the fees proportional to your share of the pool liquidity. Fees earned automatically accrue in your position – you can think of it as your deposit amounts accumulating extra tokens from fees over time. These fees can be claimed when you remove liquidity or adjust via the interface.

You can add multiple liquidity positions for different ranges or pairs. Each position is independent. Pangolin’s dashboard will list all your positions, with details like current value, range, fees earned, etc., so you can monitor them easily.