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In this post we're going to run through how you can use the new AMM (Automated Market Maker) functionality recently added to the Stellar network to add liquidity to your favourite tokens. There's a bit of assumed knowledge for this one. You should already know how to set up a Stellar wallet, configure a trust line, and be reasonably comfortable with making trades and swaps on Stellar.
AMM was introduced in November 2021 and simply put, it allows you to natively provide liquidity to any token on the Stellar network. The main challenge at the moment is that most wallets don't currently support this functionality, and if they do, you're limited to a small subset of core tokens. To add liquidity to the projects that really need it (i.e.: small cap tokens), you're going to need a different way to go about it. Enter albedo.link
Although not technically a wallet, for our purposes, Albedo acts a bit like a web-based Stellar wallet that supports adding liquidity. It's compatible with all the other Stellar wallets (Lobstr, Solar, Interstellar, etc), and if you like, you can import your seed from these to be able to access your Stellar account directly. Alternatively, you can create a fresh account and just transfer across what you want from your main wallet.
The instructions that follow will run you through how to add liquidity via Albedo from start to finish, assuming that you haven't got an Albedo account set up. If you do, just skip ahead!
Step 1: Create an account
This part is pretty straight-forward. Just head to https://albedo.link and click Create Albedo Account:
On the next screen, read the welcome message and click Proceed.
Enter a password for you account or alternatively log in or import an existing account. If you choose to import an account, you'll be prompted t oenter your phrase or seed and a password on the next page.
Once you're in, you'll be taken to the main app, which looks a lot like a wallet.
Step 2: Add Liquidity
Now the fun begins. To add liquidity, you'll need to have equal values of the 2 tokens you want to stake. The tokens you choose are important as the project will gain the most benefit if you stake the pairs that are most commonly traded on. Generally speaking, this will be XLM plus the token that you're interested in. Presumably you already have trustlines set up and enough currency in them to invest with. For this example, we will create an XLM/Manangos pair.
To start, click on the Liquidity button from the main ribbon:
Then click the big "Add liquidity to the pool" button
You'll then be taken to the Liquidity screen where the magic happens.
Select the 2 pairs that you want to use, and specify the totals totals you want to stake. The app will automatically work out the matching amount in the other currency:
The slippage amount defaults to 1% and this should be fine for most transactions. Once you're happy with your numbers, click Deposit and enter your password to confirm your transaction.
The transaction history below the button will update and you should see the transaction get processed in real time. Once completed, it will add a transaction number and you're good to go. In the rate event that it fails, you may need to update your slippage a little bit to ensure it goes through. This should only happen on small transactions and low liquidity projects.
Once complete, you can click the Liquidity menu button again and you should see your totals and a button that you can click to unstake your pairs
Congratulations! You're now staking on Stellar and will earn a portion of future liquidity fees. You'll also make it easier for people to trade on your target token and reduce the buy/sell spread in its order book.
This article is a step by step guide and doesn't address the whys, risks, and rewards associated with staking. We will cover this in future articles, but in the meantime, remember to only invest what you can afford to lose, and make your own financial choices!
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