Adding Liquidity on PancakeSwap V3: REX/BNB Pair: A Step-By-Step Guide for Beginners

Understanding PancakeSwap V3

Pancakeswap is a decentralized exchange (DEX) supporting the Binance Smart Chain, allowing users to trade various tokens. It utilizes an automated market maker (AMM) model, meaning liquidity is provided by users instead of traditional order books. Adding liquidity helps create efficient trading and offers potential rewards through transaction fees.

Liquidity refers to how easily an asset can be bought or sold in the market without affecting its price. Adding liquidity to a trading pair, such as REX/BNB, allows for smoother transactions and reduces slippage for traders. As a liquidity provider, you earn a share of the trading fees generated by that pair.

First things first:

Before adding liquidity, ensure you have a compatible cryptocurrency wallet, such as MetaMask or Trust Wallet, configured to the Binance Smart Chain. Fund your wallet with both REX and BNB tokens, as you will need to provide an equal value of both for the liquidity pool. Ensure you have some BNB for gas fees to process transactions.

Navigate to the PancakeSwap website and connect your wallet using the ‘Connect Wallet’ button on the top right. Once connected, click on ‘Earn’ > ‘Farm/Liquidity’, and select ‘Add Liquidity’.

From the drop-down menu, choose V3, select the REX token and BNB to create or add liquidity.

Important: $REX contract to confirm or add the token:

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Specify the amount of REX and BNB you wish to add to the liquidity pool, ensuring it is balanced in value. After entering the desired amounts, review the estimated share of the pool you will receive and confirm the transaction.

Specifying a wide $REX per $BNB price range is also important as you won’t be earning trading fees if the price goes out of your specified price range.

Approve the token spending if prompted, then finalize by clicking ‘Supply’ and confirming the transaction in your wallet.

Once your transaction is confirmed, you will receive liquidity provider (LP) NFT tokens representing your share in the pool. These LP tokens can be used later for withdrawing your liquidity or staking to earn additional rewards. Regularly monitor your holdings and fee earnings through PancakeSwap’s ‘Earn’ > ‘Farm/Liquidity’ section to stay updated.

Welcome to the great world of DeFi, and as always, DYOR.