LTO Network has successfully deployed a staking farm for ETH - LTO liquidity providers.
This means LTO tokens can now be bought on Uniswap. On Uniswap it is common for coins to be “farmed” for extra rewards. In this tutorial we will explain the basics of yield farming and the possibilities and risks it poses for the participants.
Earn passive income
Uniswap is an decentralized exchange built on top of the Ethereum network. The exchange works by creating liquidity pools which balance themselves through a series of smartcontracts. The contract always tries to balance the amount of these coins so that they have the same value. Incentives are provided to those willing to balance the pairs again in case of a mismatch.
People who add coins to the pools are called liquidity providers (LP). They add or deposit funds to liquidity pools, which are smart contracts that hold funds. In return for providing funds and liquidity to the pool, these LPs receive LP tokens for the corresponding pool they provide liquidity for. In our case users obtain ETH - LTO LP tokens by providing liquidity for the ETH/LTO liquidity pool on Uniswap (V2). They get a small percentage of the transaction fees on the trading pair.
Uniswap also allows users to get rewards by a staking process. This activity is often referred to as yield farming. This concept is the core of the popular DeFi projects.
By participating in yield farming cryptocurrency holders can earn passive income on the Ethereum network. It is quite similar to a regular Proof of Stake model, which involves users locking up their cryptocurrencies to get rewards.
There will be a total of 500,000 LTO (0.19 LTO / Block) tokens distributed to stakers, reward distribution will start in block 11321000 on the Ethereum network. It is possible to stake your tokens before block 11321000, you will automatically get rewarded once block 11321000 gets mined.
No new tokens get minted. Instead of minting tokens on every block (like SUSHI), our tokens are distributed from our liquidity wallet. The total supply LTO will not increase.
You can find our staking portal at https://farm.lto.network/
LTO ERC20 address : 0x3db6ba6ab6f95efed1a6e794cad492faaabf294d
Learn more about Uniswap & Liquidity pools here.
The risk for liquidity providers
When trading happens on Uniswap, users will trade their tokens for the liquidity pool tokens. For example, if a user trades LTO for ETH, they buy and remove ETH from the liquidity pool by selling and adding LTO to the liquidity pool.
The more tokens there are in the pool, the more stable the price is. If the trading pair is illiquid, the price swings will be more violent.
From an LP’s point of view, whenever someone executes an order, they get more of one token but part of the other token is removed from their initial capital.
This results in a mechanism that does not guarantee you can take out as many coins as you put into the contract as prices are moving up and down. You could end up with more coins on side of the liquidity farm or with less value than you put in to the contract to begin with. They call this impermanent loss and this is something to read up on before you engage into yield farming.
How do I provide liquidity on Uniswap?
1. Go to ETH/LTO liquidity pool and click on +Add Liquidity in the top right corner.
2. Approve Uniswap to use your LTO and ETH token.
3. Enter the amount of Liquidity you wish to provide to the liquidity pool. Once you successfully supplied the liquidity then you will receive the corresponding amount of LP tokens.
*Keep in mind you must provide the same value in ETH as in LTO*
4. You can add the LP tokens to display in your MetaMask wallet by adding
“ 0x9cd7403ac4856071581e1f5a298317d9a72a19cf ” to custom token and it should properly be displayed in your wallet.
How do I participate in liquidity staking and claim my reward?
1. Go to the staking page and unlock your erc20 wallet with Metamask or WalletConnect.
2. Approve the farm to access your LP token.
3. Click on “Deposit”
4. Enter the amount of LP token you would like to stake and confirm.
5. Collect your reward in LTO tokens by clicking on the “Harvest” button.
How do I withdraw my LP and tokens?
To withdraw your LP tokens simply click on the “Withdraw” button and select the amount of LP token you wish to withdraw from the farm.
To withdraw your LTO and ETH tokens, simply visit the Uniswap pool interface, select the LTO-ETH pool, click on “remove” and enter the amount you wish to remove.
If you have any additional questions, please drop by our telegram group and we’re ready to help you out. Happy Yield Farming!