I'm sure that I am like a lot of people out there, mining away on Alien Worlds each day/week/month collecting precious TLM. It caused quite a spike in users after the Binance listing of TLM and, even though the game hasn't progressed into the next stage yet, I continue to chip away in the background earning my piece of NFT-Gaming history. However, if you often read my articles you'll know that whenever I earn crypto I always look for a good way to put those earning back to work and passively increase my position. So, back when TLM was initially listed and the price had settled at a reasonable level I took some of those mining earning and went about putting them back into the system to do work.
In this article, we're going to take a look at the relevant steps for providing WAX-TLM liquidity on the Alcor decentralized exchange (DEX). Given that the fees on the WAX chain are 0 this a great starter project for folks wanting to look at/understand the mechanics of providing liquidity to an automated market maker (AMM) in a reasonably safe environment. As this is article is first and foremost a guide I'll not go into too much detail about the mechanics though, if you'd like to read more, and consider the main risk for this kind of earning (Impermanent Loss), please check out this helpful guide from the Alcor team:
Please remember this is not financial advice. Remember to consider all the risk before making a decision and make sure that your decision suits your personal circumstances.
Mining TLM / Selling TLM
It would be quite easy each month to convert my TLM to WAX as I often use that for buying NFTs in the Bitcoin origins series, however, given that I'm in no immediate need of accessing the funds it seems only appropriate to have them earn morn rather than sitting idle. Below is the mining rig I use, it is nothing overly special, I don't earn a massive amount, just chip away at it in the background whenever I am reading articles etc. If you really want to up your game take a look at this handy calculator for working out land/tool combos as well monitoring your stats:
I did at onetime try providing liquidity with some of my TLM on PancakeSwap but found the volume to low on that amount to get any meaningful traction and given it was a BNB pair the fluctuations between the two markets made it a little more unpredictable. So instead it was to the Alcor DEX I turn where I knew at the very least there should be a stable flow of newly mined TLM being converted to WAX, meaning a decent opportunity to build on the 0.3% fee charged (and distributed to liquidity providers) for the swapping using their AMM. As you can see below the volume jumps about a bit, and has declined since the initial Binance listing. It hasn't dropped off altogether though and I don't doubt when the game moves to the next phase it should pick up somewhat.
Providing Liquidity (Alcor)
So without much more chatter let's get cracking on this process. The first place to start is on the Alcor main DEX site:
Step 1 (setup/connection):
- 1.) Make sure you're on the "WAX Mainnet" and then connect your relevant wallet, there are 6 main options to choose from (including the WAX cloud wallet and Anchor)
- 2.) Select AMM Swap, bottom left corner (or on the top left navigation bar).
Step 2 (AMM Section):
- 1.) The default is the swap/sell screen, here you can easily swap between a range of pairs available on the AMM
- 2.) From the top left select "+ liquidity"
- 3.) Note that additional documentation and explanation of risks can be found by clicking "Earn on Liquidity" in the top right.
Step 3 (Adding Liquidity):
- 1.) After selecting "+ liquidity" you should see a similar screen but where the "sell/buy" section has been replaced with "Asset 1/Asset 2"
- 2.) To the bottom of the screen you can see the total pooled balances of all TLM/WAX held by the AMM
- 3.) Once liquidity is provided you'll use the right panel to manage/monitor your position
- 4.) To initiate adding I've clicked here on the "TLM" balance in my note that you can always manually type in the values but I plan on depositing all of the funds
- 5.) The Asset 1 field should auto complete with the WAX needed to match the pair (it should be 50/50 value at the time of adding) and, once ready, click "Provide Liquidity"
- 6.) Your wallet will ask you to sign a transaction and once that is confirmed the top right corner of the screen should show a pop-up indicating you were successful. If it didn't, don't panic, it is possible in the time you were signing the transaction the pool's amounts shifted so just go back and press the TLM balance button again to readjust the balance. Alternatively, click the arrow flip the TLM to the top box and then click the balance icon there
- 7.) Finally, once you've provided liquidity you'll initially see the fund appear under the "Earning (Fees)" section but after a few mins they will move to the 'Deposit section'.
Note: When reviewing your position a negative number means those tokens have been rebalanced and dropped (due to market fluctuations) and a positive number is earned. Personally I like to just look at the total value over both assets to see how my pot is doing. In the example number above we can see this is around a 22% increase on the initial investment so far, not bad for idle assets.
In the event that I need to access the funds at any time I can just withdraw whenever and the swap as needed to the token of choice, that way I think about this pot as just having a rough dollar value and don't worry about the negative numbers provided I remain in the green.
Step 3 (Removing Liquidity):
- 1.) To remove liquidity just head back to the swap screen
- a.) Select either the "- liquidity' button at the top of the swap section
- b.) Or click "-" on the right side of the liquidity positions sections
- 2.) Either enter the specific amount of liquidity tokens (WAXTLM) that are in your wallet or move the slider to the relevant position
- 3.) Check the balances and click withdraw, sign the contract and the fund will appear in your wallet nearly immediately.
As you can see the whole process is really straight forward with the Alcor DEX setup, which makes it a really good entry level DEX for the space. There are 0 fees for transactions, which is nice so it means you can get at the funds any time without worrying how much you will pay in gas prices.
Even if you're a seasoned miner or just chipping away in your spare time like me, there is no reason to not make use of liquidity provision as a way to build up your assets. Remember that the fees you earn are proportionate to the volume the DEX does and your position in the pool. The longer you can leave them there obviously the better, it will off set any impermanent losses with trading fees that way. I top up my liquidity every few weeks just to keep it ticking over, I don't mine a lot but what I do goes into the pool.
Thank you for reading the article, hope you found it useful and are able to make a little extra WAX/TLM on the side, good luck y'all!