Tutorials:Creating a Liquidity Position

Adding Liquidity to a Pool

As we have seen, Uniswap sends part of the funds to a Fee collector address. Fees are distributed among the Liquidity Providers in proportion to the percentage of liquidity they own.This is what motivates people to provide liquidity to a pool.

In projects where there are few transactions this reward can be very low, and for this reason "Farms" are introduced to give additional rewards to liquidity providers.

We can add liquidity to a pool in Uniswap "Pool" tab:

Click "New" to open a new liquidity position:

Step 1

Select Token Pair and Fees.

Now we will choose the token pair we want to add liquidity to:

We will choose POL and Summer Token. It is already in the list because we used it before, but if not, you have to paste the contract address in the search window.

For Polygon we will leave the 0.01% Fee tier.

Notice: To deposit the liquidity in the farm we MUST select 0.01% Fee Tier

Step 2

Set Price Range

• Set price range to "Full Range".
• Make sure the minimum price is zero and the maximum is infinity.

Step 3

Enter Deposit Amounts

Now we choose the amounts to deposit. We chose 1 POL and Uniswap filled in the necessary amount of Summer Tokens to complete the Liquidity Position.

Since we have enough Summer to cover that we procede:

Review, and click on "create"

First we give permission to Uniswap to withdraw the tokens:

Confirm the transaction:

Now we have a WMatic/Summer liquidity position:

Uniswap V3 Positions NFT

Click on the liquidity position to expand the details. Notice we have the LP identified with the number: 2381535

If we look at it in Metamask, we are the proud owners of a NFT!

This NFT is our "receipt" for the POL and Summer tokens given to the Liquidity Pool contract, and we will return it to Uniswap when we retire our money from the pool.

In the next quest we will deposit this NFT in the Seasonal Tokens Farm.