Liquidity Pairs are great way to provide a liquidity to a project and help stabilize the price of the token. It comes with a reward of share of the network fee and many LPs can be staked to earn passive income. In this article, I will guide you through a general way of creating Liquidity Pair on PancakeSwap, one of the popular Decentralized Exchange (DEX) on Binance Chain.
Here are generic steps of creating Liquidity Pair
- Access a DEX where the token pair smart contract is deployed such as PancakeSwap via a Dapp browser such as those within the Metamask.
- Connect your Wallet to the DEX using the Connect Wallet button. This gives DEX an access to use your tokens for creating LP. There are multiple ways to connect wallet and depends what wallet you use.
- Access the Liquidity page on the DEX. On Pancakseswap, it’s under Trade > Liquidity
- There will be option to Add Liquidity. Click on that.
- You can then choose the pair of tokens and how much Liquidity you want to provide.
- If the token you are trying to pair is not found, you can search for the token by contract address and then import the token.
- You can then enable the tokens. Make sure the grant permission.
- Once the tokens are enabled, you can supply liquidity. The number of tokens you specified will be reduced from your wallet and you will gain a LP token. Make sure to add the LP Token to your wallet so that you can track it.
- Many projects which created liquidity pairs also allow you to stake the LP tokens on their website so that you earn not only the transaction fee but also the staking rewards.