Biswap

As a DEX project, Biswap always strives to correspond to the market tendencies to create a favorable environment for Liquidity Providers. AMM V3 is a new standard for DEXs that Biswap adheres to. It allows enhanced operation on the platform and provides Biswap users with more beneficial conditions.<ul><li>Effective liquidity distribution</li><li>Less slippage and impermanent loss</li><li>Boost of TTV and TVL</li><li>Development and expansion of the Biswap ecosystem</li></ul>Liquidity provision is the most crucial aspect of the AMM V3 operation, and the role of market makers can&#39;t be overlooked. That&#39;s why Biswap encourages you to become a Liquidity Provider and experience all the benefits of the new AMM together.How does AMM V3 affect the Liquidity Providers? What benefits do they get? And how to become one of them? Keep reading to figure it out.<h2 id="header-0">Role of Liquidity Providers in AMM V3</h2>A Liquidity Provider is a user that deposits crypto into the liquidity pool and gets rewards in return. By liquidity provision, they become the source of trading volume that ensures that trades can be executed as planned and at the desired prices. This way, Liquidity Providers may also be called market-makers, as they influence the trading environment.Automated market makers (AMM) allow automatic exchanges within liquidity pools, as prices are determined by a liquidity amount and calculated by a mathematical formula. This way, AMM allows trade without third parties or intermediaries.Why are Liquidity Pools important?A liquidity pool is a cryptocurrency locked in a smart contract that allows trading on the decentralized exchange. In other words, trading occurs within a liquidity pool, which means that the more liquidity (locked crypto) in the pool, the faster and more profitable trades will be. For this reason, Liquidity Providers directly impact the trading process on the DEX, as they are incentivized to contribute to these pools through earning fees from the trades that happen within the pool. This is a key aspect of why liquidity pools are important.Biswap AMM V3 aims to distribute liquidity more efficiently than a previous version do and, as a result — maximize benefits for Liquidity Providers and traders.<h2 id="header-1">Benefits for Biswap Liquidity Providers | AMM V3</h2><img src="https://static.biswap.org/blog/1687356362094.png?w&#61;3840" />New AMM allows Liquidity Providers to be flexible in their strategies and scale up their capital efficiency by up to 4000x. Look at the great opportunities awaiting Biswap investors.<ul><li>80% LP rewardsLiquidity Providers receive up to 20% higher LP rewards among other V3 DEXs on the BNB Smart Chain. They get 80% LP rewards from trading fees for swaps and 80% LP rewards from trading fees for limit orders. LP rewards are paid in token pair users provide liquidity for.</li><li>Multi-tier fees for poolsLiquidity Providers can select among multi-tier fees for their liquidity positions that will be paid by traders. This way chosen fee tier will impact their profit from LP rewards and ensures variability.</li><li>Automatic participation in V3 Farms If the set range is matched with the current price, and the chosen fee tier has active Farm rewards, the Liquidity Provider starts to earn them with no additional staking. Also, users will spend less on transaction fees as they no longer need to stake LP tokens to activate Farms.</li></ul><h2 id="header-2">How Does AMM V3 Liquidity Work?</h2>Learn important aspects of AMM V3 liquidity that might be new or different from your previous experience.<h3 id="strong-nft-lp-strong">NFT LP</h3>When users provide liquidity on V3, they will receive an NFT LP instead of LP tokens, like it was on V2. It maintains all the data that concerns your position in the liquidity pool and provides you with actual information.NFT LP is a &#39;non-fungible token&#39; that represents and proves your participation in the liquidity pool, but you don&#39;t need to stake it in order to participate in V3 Farms.<h3 id="strong-concentrated-liquidity-strong">Concentrated Liquidity</h3>V3 AMM allows Biswap Liquidity Providers to deposit their crypto for a particular price interval by setting a price range. Users can set one or multiple positions with the same or different price ranges for a liquidity pair. It means that liquidity will be used within a certain price interval, where most trades occur, instead of being distributed along the price curve between 0 and infinity.By narrowing the price range, Liquidity Providers can decrease the impermanent loss, thereby preserving a portion of their capital. Note that it also depends on users&#39; strategy, range size, and other factors.<h3 id="strong-liquidity-states-strong">Liquidity States</h3>To understand how AMM V3 liquidity distributes and brings income, let&#39;s divide it into a few states: concentrated, active, and inactive liquidity.<h4>Active Liquidity</h4>When the range set by a Liquidity Provider intersects or matches the real price diapason where trades occur, their provided liquidity starts to bring profit. Once liquidity is active, users receive LP rewards and automatically participate in V3 Farms, which also brings profit.Example:&#x1f4cd;APR figures are conditional.You are providing liquidity in the BSW/USDT pair. Let&#39;s say the BSW price is 0.25 USDT. You have provided 1000 USDT&#43;4000 BSW&#61;~$2000, then you have set a price range for BSW/USDT of &#43;50% to -50%.It means you will receive a commission when the price ranges from 0.125 USDT to 0.375 USDT per 1 BSW.If, for instance, you want to lock the LP for 30 days, your APR will be 20%. You will earn rewards as long as the price stays within the specified price range.Let&#39;s take the price fluctuation within the range of 0.2 to 0.3 in our example. In this case, as an LP provider, you will approximately receive:2000 * (0.2(APR)/12) &#61; $33.3 in BSW and USDT tokens&#x1f4cd; If the price goes beyond the set range, APR will not be accrued.&#x1f4cd; If the price exceeds the upper limit (0.375 USDT per BSW), the position will only consist of USDT.&#x1f4cd; If the price falls to the lower limit (0.125 USDT per BSW), the position will fully transition to the volatile asset — BSW.The narrower the range you set, the higher your APR becomes, as its liquidity is used much more effectively.For example, by setting a range of &#43;100% and -100%, you will receive a 5% commission, and by selecting a price range of &#43;10% to -10%, you will receive a commission of 256%.<h4>Inactive Liquidity</h4>Because of market volatility, crypto prices can move outside the range set by the Liquidity Provider. Once it happens, the liquidity stops earning fees and becomes inactive. To activate liquidity, users have to rebalance it manually. It will be necessary to withdraw the inefficiency liquidity and provide it for a corresponding price range to start earning.<h3 id="strong-multi-tier-fees-strong">Multi-tier Fees</h3>Liquidity Providers will be able to choose a fee tier for the liquidity they supply crypto in: 0.015%, 0.08%, 0.28%, 1%. These fee tiers correspond to different pools. By setting a particular fee tier, Liquidity Providers select the pools according to the risk they are willing to take due to each pair&#39;s volatility.For example, higher fees are more suitable for those pairs where less liquidity is provided, and more volatility is expected, while lower fees are more suitable for more stable pairs. By applying different fees, Liquidity Providers can potentially compensate for the impermanent loss from volatility with LP rewards.Multi-tier fees apply to regular swaps, not limit orders. Each fee-tier option has a description that represents the best option according to a type of liquidity pair:<ul><li>0.015% for pair of stable tokens, such as USDT/USDC</li><li>0.08% for pair of stable tokens and non-stable tokens, such as USDT/ETH</li><li>0.28% for pair of non-stable tokens, such as ADA/BNB</li><li>1% for pair of exotic tokens, such as WBNB/SFP</li></ul><img src="https://static.biswap.org/blog/1687356385665.png?w&#61;3840" /><h3 id="strong-amm-v3-farms-strong">AMM V3 Farms</h3>Only Biswap Liquidity Providers can earn extra rewards from V3 Farms. One of the advantages is that you do not need to make additional actions (like staking LP tokens on Biswap V2 Farms) and spend funds on transactions. Participation in V3 farms is automatic. How does it happen?There are two conditions:<ol><li>The range your set corresponds to the current price diapason (active liquidity).</li><li>The fee tier you choose has active Farm rewards.</li></ol><img src="https://static.biswap.org/blog/1687356433833.png?w&#61;3840" />&#x1f4cd; Note that the Biswap team retains the right to change the fee tiers that will be powered by farm rewards at their own discretion, market conditions, and Biswap’s strategy.Rewards calculationsCurrently, your rewards share is represented in general APRs, calculated based on the entire pool.Personal APR is an APR that is dynamically calculated according to the user&#39;s range. This feature will be implemented in the next iteration as for the development of this APR, more historical data and more positions are needed.<h3 id="strong-liquidity-migration-from-v2-to-v3-strong">Liquidity Migration from V2 to V3</h3>If you already are a Biswap Liquidity Provider on AMM V2, you are kindly welcome to migrate to the newest version. This process requires a few clicks. Check out the <a href="https://blog.biswap.org/article/how-to-migrate-to-v3-simple-guide" rel="noopener noreferrer nofollow">Guide</a> to be confident in every step.<h2 id="header-3">How to Provide Liquidity to Biswap V3 | Guide</h2>&#x1f4cd; Please note that the screenshots provided in this article are not final. After the release, there will be minimal changes.<ol><li>Go to <a href="https://biswap.org/" rel="noopener noreferrer nofollow">Biswap home </a>page and click &#39;Trade&#39;.<img src="https://static.biswap.org/blog/1687356480516.png?w&#61;3840" /></li><li>Choose a &#39;liquidity&#39; section.<img src="https://static.biswap.org/blog/1687356515564.png?w&#61;3840" /></li><li>Make sure you are on the V3 page ( if not, switch to it by clicking on &#39;V3&#39;).<img src="https://static.biswap.org/blog/1687356546672.png?w&#61;3840" /></li><li>Click &#39;Add Liquidity&#39; to start the provision.<img src="https://static.biswap.org/blog/1687356572479.png?w&#61;3840" /></li><li>Choose a token pair you want to provide liquidity for.<img src="https://static.biswap.org/blog/1687356594603.png?w&#61;3840" /></li><li>Enter the amount of the funds you want to lock.<img src="https://static.biswap.org/blog/1687356628218.png?w&#61;3840" /></li><li>Now you can choose a fee tier for your pool. The displayed fee tier is the most suitable for this liquidity pair. If you want to choose another one, click on &#39;Edit&#39;.<img src="https://static.biswap.org/blog/1687356655051.png?w&#61;3840" /></li><li>You have 4 options to choose from. Click on the preferable one.<img src="https://static.biswap.org/blog/1687356686294.png?w&#61;3840" /></li><li>The next step is to set the range. The platform automatically generates the default price range, but you can easily change it according to your risk management by clicking on the &#39;-&#39; and &#39;&#43;&#39; buttons or by pulling the borders on the chart.  <img src="https://static.biswap.org/blog/1687356704756.png?w&#61;3840" /></li><li>When you have completed all the settings, click ‘Approve 1st Token’. <img src="https://static.biswap.org/blog/1687356717223.png?w&#61;3840" /></li><li>Approve the transaction via the wallet.<img src="https://static.biswap.org/blog/1687356740233.png?w&#61;3840" /></li><li>Approve the liquidity provision on the website by clicking ‘Confirm.’<img src="https://static.biswap.org/blog/1687356758853.png?w&#61;3840" /></li><li>Approve the transaction via the wallet.<img src="https://static.biswap.org/blog/1687356773124.png?w&#61;3840" /></li><li>Congratulations! You become a Biswap Liquidity Provider. Click ‘View Liquidity’.<img src="https://static.biswap.org/blog/1687356784262.png?w&#61;3840" /></li><li>Now your liquidity displays on the Biswap V3 Liquidity page.<img src="https://static.biswap.org/blog/1687356797234.png?w&#61;3840" /></li></ol><h2 id="header-4">Closing Words</h2>Biswap DEX created a huge pledge of opportunities for Liquidity Providers with the AMM V3 release. Every investor has the ability to impact its profit through different aspects, such as  price ranges, Farms rewards, and fee tiers. AMM V3 Farms offer easy and less resource-consuming ways to earn extra rewards exclusively for those who provide liquidity and choose the best strategies!Hurry up to be among Biswap investors and enjoy the power of liquidity!

Liquidity Provision on Biswap V3 | Concentrate to Earn More

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