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Provide Liquidity

Earn fees by providing liquidity to STRATO's decentralized exchange pools.

Variable Returns & Risks

APR estimates, gas costs, and trading fees shown are based on historical data and typical conditions. Actual returns may vary significantly based on trading volume, pool size, and market conditions. You may also experience impermanent loss. Always research pool performance before providing liquidity.

Complete Example: Provide $6,000 ETHST-USDST Liquidity

Your situation:

  • You have: 1 ETHST ($3,000) + 3,000 USDST
  • You want: Earn trading fees passively

What you'll do:

  1. Choose ETHST-USDST pool
  2. Add liquidity
  3. Earn fees automatically
  4. Remove liquidity (anytime)

Time needed: 5 minutes
Potential earnings: ~8-15% APR (fees + Reward Points)
Total gas cost: ~$0.30

Quick Walkthrough

Step 1: Choose Pool - Go to Pools page - Select ETHST-USDST pool - Check: 24h volume $500k, APR 12%

Step 2: Enter Amounts - Enter: 1 ETHST - Auto-fills: 3,000 USDST (to match ratio) - Your share: 0.5% of pool

Step 3: Add Liquidity - Click "Add Liquidity" (~$0.10 gas) - Confirm in wallet - Approvals + add liquidity happen automatically in one transaction - Wait 1-2 seconds

Result: 

✅ Added: 1 ETHST + 3,000 USDST to pool
✅ Received: LP tokens (representing your 0.5% share)
✅ Earning: ~$2/day in fees (12% APR)
✅ Plus: Reward Points

Your position:

  • Pool share: 0.5%
  • Value: $6,000
  • Daily earnings: ~$2 in fees
  • Monthly: ~$60 (if volume stays constant)

Overview

What is liquidity providing? - Deposit token pairs into liquidity pools (e.g., ETHST + USDC) - Earn trading fees from every swap that uses your pool - Receive LP (Liquidity Provider) tokens representing your share - Plus earn Reward Points

Why provide liquidity? - Passive income: Earn from trading fees (typically 0.3% per trade) - Reward Points: Bonus rewards for liquidity providers - Support ecosystem: Enable trading for others - Capital efficiency: Put idle assets to work

Prerequisites

Before providing liquidity:

  • [ ] STRATO account set up (Quick Start Guide)
  • [ ] Wallet connected to STRATO network
  • [ ] Both tokens of a pair in your wallet (e.g., ETHST + USDC)
  • [ ] Small amount of USDST for gas fees
  • [ ] Understanding of impermanent loss (Core Concepts)

How Liquidity Pools Work

Automated Market Maker (AMM)

  1. You deposit equal value of two tokens (e.g., $1,000 ETHST + $1,000 USDC)
  2. Traders swap between these tokens, paying fees
  3. You earn a share of fees proportional to your pool share
  4. You can withdraw anytime (subject to available liquidity)

Pool Math

Pools maintain a constant product:

x × y = k (constant)

Where:
x = Token A reserves
y = Token B reserves  
k = constant product

This formula automatically sets prices based on supply and demand.

Your Share

You receive LP tokens representing your ownership:

Your LP tokens / Total LP tokens = Your % of pool

Example: You own 1,000 LP tokens, total is 100,000 LP tokens - Your share: 1% - You earn: 1% of all trading fees

Step-by-Step: Add Liquidity

Step 1: Choose a Pool

  1. Navigate to Pools section in STRATO app
  2. Browse available pools or search for specific pair

  3. Check pool stats:

  4. TVL (Total Value Locked): Pool size

  5. Volume 24h: Trading activity
  6. APR: Estimated annual returns (fees + rewards)

Popular pools:

  • ETHST / USDST - High volume, stable
  • WBTC / ETHST - Dual crypto exposure
  • USDST / USDST - Minimal impermanent loss

Step 2: Enter Amounts

  1. Click Add Liquidity on chosen pool
  2. Enter amount for one token
  3. Second token amount auto-fills to maintain pool ratio

Example:

  • Pool is 50% ETHST, 50% USDST
  • You enter: 1 ETHST ($3,000)
  • Auto-fills: 3,000 USDST (to match value)

Start Small

Test with ~$100-500 first to understand the process before committing large amounts.

Step 3: Review Details

Check:

  • Token amounts: Both tokens and their USD values
  • Pool share: Your % of total pool
  • Exchange rate: Current price in pool
  • Estimated APR: Expected annual returns
  • Fees: Gas cost (< $0.10 in USDST)

Step 4: Add Liquidity

  1. Click Add Liquidity
  2. Review transaction in wallet popup
  3. Confirm transaction
  4. Wait for confirmation (~1-2 seconds)

✅ Done! You now have LP tokens in your wallet.

Earning from Liquidity

Trading Fees

How you earn:

  • Every swap pays 0.3% fee (typical)
  • Fees distributed proportionally to all LP holders
  • Automatically added to pool (compounds)

Example:

  • You own 1% of ETH-USDC pool
  • Pool does $1,000,000 daily volume
  • Daily fees: $1,000,000 × 0.3% = $3,000
  • Your share: $3,000 × 1% = $30/day

Reward Points

Additional rewards in Reward Points:

  • Distributed to select pools
  • Varies by pool and season
  • Claim anytime in Rewards section

Tracking Earnings

Monitor your position:

  1. Go to Advanced (in sidebar) → Swap Pools tab
  2. See your LP positions
  3. View accumulated fees
  4. Check current value vs. initial deposit

Removing Liquidity

Step 1: Go to Your Positions

  1. Navigate to Portfolio → Liquidity
  2. Select pool to withdraw from

Step 2: Choose Amount

  • Remove All: Withdraw 100% of position
  • Partial: Enter % or amount to withdraw
  • Receive both tokens proportionally

Step 3: Confirm Withdrawal

  1. Click Remove Liquidity
  2. Review amounts you'll receive
  3. Confirm transaction in wallet
  4. Wait for confirmation

Tokens (including earned fees) return to your wallet.

Understanding Impermanent Loss

What Is It?

Impermanent Loss (IL): Loss vs. simply holding the tokens when prices diverge.

Example

Initial deposit:

  • 1 ETHST ($3,000) + 3,000 USDST = $6,000 total

ETH doubles to $6,000:

  • Pool rebalances: 0.707 ETHST + 4,242 USDST - Pool value: $8,485
  • If you just held: 1 ETHST ($6,000) + 3,000 USDST = $9,000
  • Impermanent loss: $515 (5.7%)

When Is It a Problem?

  • High IL: When token prices diverge significantly
  • Low IL: Stablecoin pairs (USDC-USDST) or correlated assets

Mitigating IL

  1. Choose stable pairs: USDC-USDST has minimal IL
  2. Earn fees to offset: High-volume pools compensate with fees
  3. Long-term provide: Price often reverts, making loss "impermanent"
  4. Reward Points: Additional rewards can exceed IL

IL is Impermanent

Loss only realizes if you withdraw. If prices revert, the "loss" disappears. Plus trading fees and rewards often exceed IL.

Best Practices

Choosing Pools

Good pools have:

  • ✅ High trading volume (more fees earned)
  • ✅ Deep liquidity (lower IL from your deposits)
  • ✅ Verified tokens (avoid scams)
  • ✅ Reward Points incentives

Avoid pools with:

  • ❌ Unknown/unverified tokens
  • ❌ Extremely low liquidity
  • ❌ Suspicious APR (too good to be true)

Managing IL Risk

Low IL strategies:

  • Stablecoin pairs (USDC-USDST, USDC-DAI)
  • Correlated assets (WBTC-ETH move together)
  • Short time horizons in stable markets

Higher IL but profitable:

  • High-volume pairs (fees offset IL)
  • Pools with Reward Points
  • Long-term positions (price reverts)

Position Management

  • [ ] Monitor positions weekly
  • [ ] Check if fees exceed IL
  • [ ] Rebalance between pools based on APR
  • [ ] Claim Reward Points regularly
  • [ ] Withdraw if IL becomes too large

Pool Stats Explained

TVL (Total Value Locked)

Total $ value in the pool. Higher = more stable prices, lower price impact.

Volume 24h

Total trading volume in last 24 hours. Higher = more fees earned.

APR (Annual Percentage Rate)

Estimated yearly returns from:

  • Trading fees
  • Reward Points

Example: 25% APR on $10,000 = ~$2,500/year

Warning

APR is estimated based on recent activity. Actual returns vary with volume and prices.

Your Pool Share

Your % of total pool. Determines your fee earnings:

Your fees = Total pool fees × Your share %

Advanced Strategies

Liquidity Farming

Maximize returns by:

  1. Choose highest APR pools
  2. Reinvest earned fees (compound)
  3. Claim and reinvest Reward Points
  4. Rotate to best-performing pools

Range Orders (Concentrated Liquidity)

Some pools support concentrated liquidity:

  • Provide liquidity in specific price ranges
  • Earn more fees per capital
  • Higher risk if price exits range

Not yet available on all STRATO pools - check pool type.

Arbitrage Protection

Be aware of:

  • Price discrepancies between exchanges
  • Arbitrageurs quickly correct, earning fees from your pool
  • You still earn fees, but IL can occur rapidly

Common Issues

"Insufficient Balance"

Cause: Not enough of one or both tokens

Fix:

  • Check you have both tokens
  • Verify balances cover amounts + gas
  • Swap to get missing token

"Price Updated" Warning

Cause: Pool ratio changed since you started

Fix:

  • Accept new price
  • Or cancel and try again with updated amounts

"Slippage Tolerance Exceeded"

Cause: Pool price moved beyond tolerance

Fix:

  • Increase slippage in settings
  • Try again with updated amounts

Risk Management

Diversification

  • Don't put all capital in one pool
  • Split across 3-5 pools
  • Mix stable and volatile pairs

Start Small

  • Test with $100-500 first
  • Learn the mechanics
  • Scale up gradually

Monitor Regularly

  • Check positions weekly
  • Compare returns vs. holding
  • Exit if IL exceeds comfort level

Emergency Exit

If you need to exit quickly:

  • Remove liquidity anytime
  • Receive both tokens back
  • May realize impermanent loss
  • But you keep all earned fees

What's Next?

Claim Your Rewards

Maximize earnings:

→ Rewards Guide - Learn to claim Reward Points

Optimize Your Portfolio

Need Help?