Providing liquidity (LP)
What is a Position in Concentrated Liquidity?
A position in a concentrated liquidity DEX like Ilum.Fi refers to the range within which your liquidity is active. Instead of providing liquidity across the entire price spectrum (like in traditional AMMs), you define a specific price range where your liquidity is deployed. This allows for higher capital efficiency and better returns.
In Range: The current market price is within your defined range, meaning your liquidity is being used for trades, and you are earning fees.
Out of Range: The current market price has moved outside your set range, meaning your liquidity is inactive, and you're no longer earning fees until the price re-enters the range.
Creating a Position and Adding Liquidity to a Pool
Step-by-Step Guide to Adding Liquidity
Navigate to the Pools Section
Go to the Ilum.Fi app and click on "Pools" from the top menu.
Select a Pool
Browse the available liquidity pools and choose one based on your preference (e.g., syUSD/ILM, RealEstateToken/BondToken).
Define Your Price Range
Use the concentrated liquidity slider to choose the range within which you want your liquidity to be active.
Narrower ranges: Offer higher returns but require more frequent adjustments to stay in range.
Wider ranges: Provide less maintenance, though with potentially lower fees.
Enter the Amount
Specify how much of each asset (both tokens in the pair) you want to add to the liquidity pool.
Preview Your Position
The interface will show a preview of your position, including the expected share of the pool, the potential fees, and whether your liquidity will be in both assets or convert to one side if out of range.
Approve the Transaction
Click "Add Liquidity" and approve the transaction from your wallet (MetaMask, Lumia Wallet, or other supported wallets).
Ensure you have enough ILM tokens or native token for gas fees.
Confirm the Position
After the transaction is approved, you’ll receive a confirmation of your new liquidity position.
Monitor Your Position
Go to "My Pools" to view and track your active liquidity positions.
From here, you can adjust the range if the market price shifts or remove liquidity when needed.
How to Check If a Position Is Out of Range
Go to "My Pools"
Navigate to the "My Pools" section on Ilum.Fi.
Review Your Active Positions
Each position shows the price range you set, along with the current market price.
Out of Range Indicator
If the current price is outside your range, the interface will mark the position as "Out of Range".
In this case, your liquidity is now in only one asset (either fully converted into one of the two assets in the pool).
Option to Adjust Your Range
You can adjust your range by clicking "Manage Position" and redefining your price boundaries. This will reactivate your liquidity and allow you to earn fees again
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