How to Create a Liquidity Pool on a Decentralized Exchange (DEX)

Adding liquidity to a DEX is a fundamental step in participating in the decentralized finance (DeFi) ecosystem. Here’s a step-by-step guide to creating a liquidity pool with icons for better clarity.

1. Access the DEX

🌐 Open the DEX App
Visit the DEX website (e.g., app.feeless.finance).

🔗 Connect Your Wallet
Click “Connect Wallet” and choose a supported wallet (e.g., MetaMask). Ensure your wallet is set to the correct network (e.g., IOTA EVM testnet).

2. Navigate to the Pool Section

📁 Go to “Pools”
Find the “Pools” or “Create Pool” section in the main navigation menu.

3. Configure the Pool

⚙️ Select Tokens
Choose the tokens you want to include in the pool. For example, Token A and Token B.

📊 Set Token Weights
Assign the percentage weights for each token in the pool (e.g., 60% Token A, 40% Token B).

💰 Choose the Trading Fee
Set the swap fee percentage (e.g., 0.3%) that traders will pay when swapping tokens in this pool.

4. Approve Tokens

✅ Token Approval
For each token, click “Approve” to allow the DEX to interact with it. Confirm the transaction in your wallet.

5. Submit for Whitelist Approval

📝 Whitelist Submission
Once the pool is configured, submit it for whitelist approval. This step ensures controlled decentralization by requiring admin validation before the pool goes live.

⚠️ Admin Review
The admin team will review the pool’s details to confirm compliance and security before adding it to the whitelist.

6. Add Liquidity

💦 Provide Liquidity
After whitelist approval, add liquidity by depositing your chosen tokens into the pool.

🔒 Receive LP Tokens
Once liquidity is added, you will receive Liquidity Provider (LP) tokens, representing your share of the pool.

7. Manage Your Pool

📈 Track Your Earnings
Monitor your share of trading fees and the performance of the pool in the “Pools” dashboard.

Important Considerations

• 📉 Impermanent Loss: Providing liquidity carries the risk of impermanent loss. Understand this concept before proceeding.
• 🔗 Gas Fees: Ensure you have enough funds for gas fees, which are required for each transaction.

This controlled decentralization approach balances innovation with security, making the platform ideal for both new and experienced DeFi users.

If you have questions or need assistance, check the official documentation or reach out to support!