Using Polkaswap to trade Umi Token and much more!
Polkaswap is a Decentralized Exchange (DEX)and Automatic Market Maker on Sora network; a blockchain and future parachain on the Polkadot network. This article will cover swapping and providing liquidity…
Polkaswap is a cross-chain DEX that runs on Sora chain, a sovereign and independent parachain of the Polkadot network. Similar to other Automatic Market Makers such as Uniswap, it is an exchange where users can swap assets or provide liquidity to these swapping pools and earn rewards. The native token for Polkaswap is PSWAP and users can earn PSWAP by providing liquidity to the Asset Pools available on the exchange.
As a decentralized project with no one controlling organization or single point of failure, it is a great place for cryptocurrency enthusiasts to trade and earn passive income by providing liquidity. Other benefits to trading on Polkaswap are:
- Lightning fast swaps — trades are completed in milliseconds
- Low transaction fees — 1/1000 the cost of trading on Uniswap
- No KYC
- Ethereum Bridge — ERC20 tokens can easily be sent backwards and forwards between Sora and Ethereum networks, via the Hashi bridge
- Powered by SORA
For instructions on how to use the Hashi Bridge to transfer ERC20 tokens to Polkaswap, please refer to this helpful Sora Wiki guide.
Swapping Tokens
First make sure you are connected to Polkaswap with your Polkadot.js account. Then click ‘SWAP’ on the Right-hand menu as shown below:
Now you are presented with the swapping main screen where you can input the two tokens you wish to buy/sell (i.e. exchange) by swapping Token A for Token B.
Choose the two tokens you wish to swap by clicking “CHOOSE TOKEN” or the arrows symbols as shown in the example above.
A list of tokens will pop up; now you can then select the token you want (by left mouse clicking it) from the list. You can also filter the list by typing in the name, asset ID or symbol of the token. In this case we are selecting UMI.
Next you must input the amount of each token that you wish to swap. Simply typing the amount, you want to swap in either field will auto-populate the correct amount in the second field so there is no need to do any math calculations here; Polkaswap does the calculation for you instantly.
Once you have the correct amounts for each token the next step is to click the ‘SWAP’ button. After clicking “SWAP”, a confirmation screen will pop up asking you to confirm that everything is indeed correct and you want to proceed.
It will give you a summary of the exact amounts of tokens you are swapping and the corresponding values in USD. Click confirm and then a second popup will appear asking for authorisation via the Polkadot.js wallet.
You must type in your password and sign the transaction to proceed. Congratulations, you just completed your first swap on Polkaswap!
Providing Liquidity
In a DEX there is no centralised authority, so a mechanism called Automatic Market Maker (AMM) is used to facility trading. For an AMM to begin trading, a third party must provide market maker funds to enable “swapping” between buyers and sellers.
Liquidity is important for a DEX to function properly, so Liquidity Providers are REWARDED with a percentage of the Pool profits and these rewards are paid in the native token of the exchange. In the case of Uniswap, this token is UNI and early adopters of the Uniswap exchange became fabulously wealthy by earning UNI for providing liquidity.
Now with Polkaswap there is another chance to earn crazy PSWAP rewards by providing liquidity to different token pools. PSWAP rewards are paid daily and anyone can become a liquidity provider with a few simple clicks.
How to Provide Liquidity
Providing Liquidity is very easy and can be completed in a matter of seconds. First make sure you are connected to Polkaswap with your Polkadot.js account. Then click ‘POOL’ on the Right hand menu as shown below:
Now you will be faced with the Liquidity Pool screen, and a message saying, “NO LIQUIDITY FOUND,” This is normal! There is no liquidity because you have not added it yet.
Next click the “ADD LIQUIDITY” button or “CREATE A PAIR” if you want to add liquidity for a brand new pair.
On the ‘Add Liquidity’ screen, you must pick the token pair which you want to add liquidity for; the first token is always Sora (XOR) but the second token you can pick according to your need.
Start by clicking “CHOOSE TOKEN” in the second column to bring up the list of tokens which are available to add liquidity.
A list of tokens will pop up, and you can then select the token you want (by left mouse clicking it) from the list. You can also filter the list by typing in the name, asset ID or symbol of the token. In this case we are selecting UMI.
Next you must input the amount of each token that you wish to supply to the liquidity pool. Remember the ratio of each token that you must supply is 50/50 so make sure you have enough of each token to proceed.
Simply typing the amount, you want to supply in either field will auto-populate the correct amount in the second field so there is no need to do any math calculations here; Polkaswap does the calculation for you instantly.
Finally, once you have the correct amounts for each token that you wish to supply to the liquidity pool, the next step is to click the ‘SUPPLY’ button.
After clicking supply, a confirmation screen will pop up asking you to confirm that everything is indeed correct and you want to proceed. It will give you a summary of the exact amounts of tokens you are providing and corresponding values in USD. As well as the percentage (%) of the total public pool that will be from your liquidity shares after the transaction.
Click confirm and then a second pop up will appear asking for authorisation via the Polkadot.js wallet. You must type in your password and sign the transaction to proceed. Within a fraction of a second, the transaction will be complete and a popup confirming the amount supplied was successfully will appear in the top right-hand corner (see example below).
After successfully supplying liquidity, you will be able to see your LP share in the Pool menu as shown below. At any time, you can instantly remove your liquidity (or add more) and recover both tokens as there is no lockup involved in supplying liquidity on Polkaswap.
Claiming PSWAP Rewards
Providing liquidity on Polkaswap generates rewards in the form of PSWAP which are paid out daily to your account. The rewards can be claimed at any time by following these steps.
Click ‘REWARDS’ on the Right-hand menu as shown below:
You will be taken to the Rewards screen which shows the rewards your account has gained from the provision of liquidity on Polkaswap. This is the amount of PSWAP your account currently has available to claim.
Click the “SIGN AND CLAIM” button and then authorise the transaction on Polkadot.js wallet to receive the rewards in your account instantly.
