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You’ve been asking for it, and we delivered — the first yield farms on Liquidswap are here! Deposit tokens in a liquidity pool on Liquidswap, stake the LP tokens, and earn rewards. Read on for a detailed tutorial:
Yield farming, or liquidity mining, means earning tokens for locking up crypto in a pool in a liquidity pool on decentralized exchange. It benefits everyone: projects get more liquidity for their tokens, DEXes increases their popularity, and users earn valuable rewards.
Farming is the most popular way to earn a passive income in DeFi, and major DEXes on Ethereum, BNB Chain, and other blockchains feature dozens or even hundreds of farms. And now, Aptos has one on Liquidswap. We were the first to release a DEX on Aptos, and now we present to you the first liquidity mining program: Hydroponic Farms.
About the name: hydroponics is an extremely efficient way to grow plants without soil. Crops are planted in a nutrient-rich liquid, sometimes with added sand or gravel. Hydroponics takes less space and water, doesn’t require pesticides, and the yield is up to 10x higher.
High yield and productivity are exactly what we had in mind with this feature, so the name was a perfect match.
Here’s how to use Hydroponic Farms on Liquidswap.
Every farm is attached to a liquidity pool featuring two tokens: APT and USDT, USDC and USDT, and so on. The pools allow for lower slippage and fees when swapping tokens, since there is a steady supply of each. You need to have some of each token in order to deposit to a liquidity pool, so if you only have APT to start, you’ll need to swap some of it for something else.
Which token, though? Choosing a pool is a bit of an art in itself, and you’ll need to take several aspects into account:
- Current Hydroponic Farms and their rewards
Check the list of Hydroponic Farm pools to see which tokens are available and the current rewards rate. We’ve started with just a few pools and will gradually add more farming opportunities. In the future, projects will be able to start their own farms on Liquidswap.
- Pool harvesting period
This refers to how much longer the pool will remain active. The Time Left field shows how much time is left until a farm closes. Hover over the calendar icon to see the start and end dates.
In this screenshot, both pools still have two weeks to run. If you deposit LP tokens in a staking pool where the harvesting period is almost up, you’ll need to remember to withdraw them and reallocate the funds. Otherwise your capital will just sit there without earning any farming rewards.
- NFT boosts
Note that the pools say ‘NFT: Pontem Space Pirates’. This means that if you have an NFT from this collection, you can boost the reward rate by staking the NFT. We’ll look at this feature in detail later on.
In our first set of farms, boosts are provided for a single collection: Pontem’s Space Pirates. In the future, projects will be able to create farms boosted by other NFT collections of their choice.
If you already have a Space Pirate, consider picking an NFT-boosted pool. And if you don’t have one, check them out on Topaz: in addition to increased staking rewards, the Pirates provide an access key to a whole Pontemverse of utility, including the future Pontem DAO.
- Trading volume
As a liquidity provider, you’ll also earn a share of the trading fees, so you want a pool with high trading volume. (More trades means more fees.) You can find this information in the Stats section.
In general, if two pools have a similar farming APR, you might consider choosing the one with the higher income from trading fees.
- Pool reserves
As a beginner, it’s safer to start with larger liquidity pools, as they are less susceptible to high volatility, liquidity dumps, and other risks.
In this tutorial, we will use the APT/USDC pool, as it has NFT boosts, high reserves, and high volume.
You need to be a liquidity provider to start farming, so we’ll begin by depositing tokens in a pool. You’ll need to add equivalent amounts of both assets: 10 APT and 10 APT’s worth of USDC, for example.
- Connect your Aptos wallet to Liquidswap. We recommend Pontem Wallet, but you can also use Petra, Martian, Fewcha, or Rise.
- If you don’t have APT, you have two options. You can buy some on a CEX like Binance or KuCoin and withdraw it to an Aptos wallet. Or, you can bridge USDT, USDC, or WETH from another blockchain using LayerZero, then buy APT. See the bridging guide and the FAQ for details.
- In this example, we will deposit APT and USDC. If you don’t have enough USDC in the wallet yet, start by swapping APT for USDC. If one of the coins isn’t registered in the wallet yet, you’ll need to register it first (and pay a small gas fee). You can also add tokens directly in Pontem Wallet by clicking Import Tokens.
- Go to the Hydroponic Farm section, locate your pool on the list, and click Add Liquidity. Note the current APY: 0.00217778 APT per week per LP. Remember that this rate can fluctuate on a daily basis. Also, how many LPs you’ll get for a given amount of funds depends on how much liquidity there is in the pool already.
You can also add liquidity through the Pools section on Liquidswap. Or, if you are already a liquidity provider and that same pool is eligible for farming rewards, you can stake the LPs in the farm section.
Enter an amount in USDC to see how much APT you’ll need to deposit, or vice versa. Make sure to leave enough APT for gas fees, both for this and future transactions!
Note the 7-day APR (107.53% in this screenshot). As you probably know, APR stands for ‘annualized reward rate’ — it’s how much you would earn if this return rate was maintained for a year. The 7-day part means that the reward calculation is based on the trading fees earned by the pool in the past 7 days. It’s NOT how much you’ll earn in 7 days! When you join a Hydroponic farm, you’ll be earning both passive income from trading fees as a liquidity provider, plus the farming APR.
Make sure that the correct curve type is selected. For stablecoin pools, such as USDT/USDC, and for pairs with liquid staking derivatives or wrapped tokens (stAPT/APT), it should say Stable. But if the two assets’ prices are independent from each other (like APT/USDC), it should say Uncorrelated. In most cases Liquidswap will make the correct choice for you, but it’s always worth checking.
- Click Add Liquidity and confirm the transaction in the wallet.
If you’ve ever deposited liquidity on an Ethereum DEX, you’ll notice how low gas fees are on Aptos: only 0.00374 APT, or less than $0.03!
- In exchange for the deposits, you’ll receive special LP tokens. They serve as proof that you own a share of the pool and are entitled to a proportionate share of the trading fees that it generates. If you decide to withdraw the liquidity, you’ll need to burn the LPs.
Check the wallet to see the LPs: they are displayed as APT-USDC (or BTC-APT, stAPT-APT, etc. depending on the pool).
Congratulations — you’re now a DeFi liquidity provider! It’s time to start farming.
Back on the farming page, click ‘Stake’. (If you still see ‘Add Liquidity’, refresh the page by pressing Ctrl+R). Enter the maximum available amount of LPs down to the first decimal. For example, if you have 250.98 LP, enter 250.9.
The Stake button will become active. If you already have a Space Pirate NFT, you can click on Add NFT to get an additional reward boost. If you don’t, simply click on Stake and confirm the transaction in Pontem Wallet.
The Hydroponic Farm page will automatically switch to the My Farms tab. You should see your farming position.
Every farm is subject to a 7-day lock period. After that, you can withdraw the liquidity from the farm. You can always add more liquidity to the pool and increase your position by clicking on Stake LP; however, this will reset the weekly locking period.
So, for example, if your original unlock date is January 25 with the unlock on February 1 and you add some LPs on January 26, the unlock date will be moved forward by 7 days to February 8 — unless the farm itself closes earlier. If the farm’s final working day is February 6, that will also be your unlock date, no matter when you make the last LP deposit.
Clicking on Stake LP, you’ll see the updated unlock date.
If you purchase a Space Pirate, you can use it to get a reward boost, as long as the farm supports it. Note that the contract boosts your stake rather than the reward rate (APY). So if you stake 1 LP, for example, and the boost ratio is 50%, the reward will be calculated based on 1.5 LP. The result is the same, of course.
Important! Each NFT can be used to boost only one farm. If you deposit LPs in two farms, you’ll need two Space Pirate NFTs to be able to boost both.
Go to My Farms. If your farm is eligible, it will display a Stake NFT button, plus the boost size (15%). There’s also a handy Discover button that will take you directly to the Space Pirates collection page on Topaz.
Click on the button, then select a Pontem Space Pirate NFT, and click on Choose NFT -> Boost.
Confirm the transaction. Once it’s processed, the farm’s information on My Farms will read ‘Boosted with” + the NFT name, and the button will change to Unstake NFT.
To remove the boost and get your NFT back, click on Unstake NFT, then confirm in the wallet. The NFT will soon reappear in the wallet’s Collectibles tab.
You can claim the rewards at any point, including during the initial 7-day locking period. The minimum claimable amount is 0.01 APT.
To get the rewards you’ve earned, click Claim and confirm the transaction in the wallet.
Note that you can claim the outstanding reward balance even after the pool itself is deactivated.
To withdraw the staked tokens from the farm, you need to wait for the unlock period to elapse. At that point, a Withdraw button will appear. Click it and enter the amount of LP that you want to withdraw and confirm in the wallet. If you have an active NFT boost, don’t forget to check the Unstake NFT box.
Your LP stake will be updated, and the LPs you withdrew will return to the wallet balance. Note that withdrawing LPs doesn’t automatically claim the rewards — you’ll need to do it manually.
Liquidswap is the first triple-audited DEX on Aptos. Our smart contracts have been checked by OtterSec, Halborn, and Zellic, so you can be sure that the code itself is secure.
Still, yield farming isn’t without its risks. The biggest is price volatility. In our first batch of pools on Liquidswap, rewards are paid in USDT, but in the future, projects will be able to start new farms and pay in their own utility tokens. In this case, the actual APR in USD or APT can be very different depending on the price performance of the reward token.
On many DeFi platforms, projects promise sky-high APYs to attract so-called ‘mercenary liquidity’ and newbies. When these users sell off their rewards, a price dump follows. Here on Liquidswap, we have carefully calculated the parameters for each farm to avoid hyperinflation and token depreciation, but as we have seen in this bear market, even a great token can quickly lose 90% of its value. So, as with everything in DeFi, only deposit what you can afford to lose.
Subscribe to our Technical Updates channel on Telegram to be the first to learn about new features in Liquidswap and Pontem Wallet. And of course, follow Pontem on Twitter, Telegram, and Discord: the team is always ready to answer your questions.
Pontem is a blockchain product studio building for Aptos and the broader Move ecosystem. We work closely with the Aptos team to produce truly innovative and secure dApps and dev tools, including the Liquidswap DEX, Pontem Walle,; the first Solidity-to-Move code transpiler, ByteBabel, and Move Code Playground, the first browser code editor for Move.