Provide Liquidity

Provide liquidity to Powfi pools and earn a share of the trading fees generated by swaps.

Powfi supports two liquidity models:

• CPMM: simple, full-range liquidity that is suitable for users who want to provide liquidity without actively managing a price range.

• CLMM: concentrated liquidity that lets you choose the price range where your liquidity is active.

The right pool type depends on how actively you want to manage your liquidity and how you expect the pair's price to behave.

Before you start

Make sure you have:

• A wallet connected to Powfi.

• The tokens you want to provide as liquidity.

• Enough ALPH to cover Alephium network fees.

• The token pair you want to provide liquidity for.

• An understanding of whether you want to use CPMM or CLMM liquidity.

If a pool already exists for the token pair, make sure you select the specific pool you want to provide liquidity to. A token pair can have one Standard (CPMM) pool and multiple Concentrated (CLMM) configurations.

Choosing a pool type

Before creating or adding liquidity, decide which pool model fits your use case.

CPMM

CPMM provides liquidity across the full price curve.

Choose CPMM if you:

• Want a simpler liquidity position.

• Do not want to actively manage a price range.

• Want your liquidity to remain available across all prices.

• Prefer a straightforward deposit and withdrawal experience.

CLMM

CLMM lets you concentrate liquidity within a selected price range.

Choose CLMM if you:

• Want to actively manage your liquidity.

• Have a view on where the pair's price is likely to trade.

• Want to concentrate capital around a specific price range.

• Are comfortable adjusting your position when the market moves outside your range.

CPMM vs CLMM

	CPMM	CLMM
Price range	Full range	User-selected range
Management	Passive	Active
Liquidity position	Pool liquidity	Individual position
Capital concentration	Distributed across the curve	Concentrated within selected range
Position management	Simple	Requires range management
Best suited for	Passive liquidity	Active liquidity management

There is no universally correct pool type. Your choice should depend on the pair, your liquidity strategy, and how actively you want to manage the position.

Creating a pool

You can create a new Powfi pool while adding liquidity. A Standard (CPMM) pool can be created only when no Standard pool exists for that token pair. Concentrated (CLMM) pools can have multiple configurations for the same pair.

To create a pool:

1. Go to the Pools tab on Powfi.

2. Select Add Liquidity.

3. Select the two tokens you want to provide as liquidity.

4. Select the pool type:

   • Standard (CPMM liquidity).

   • Concentrated (CLMM liquidity).

5. Powfi checks whether an existing pool is available for the selected token pair and pool type.

6. For the selected pool type:

   • Use an existing pool when one is available.

   • Create a new Standard pool only if none exists, or create a new Concentrated configuration.

7. For a new Concentrated pool, choose its supported configuration and fee.

8. Standard pools use a fixed 0.3% fee; only Concentrated pools offer supported fee configurations.

9. Set the initial pool price, where applicable.

10. Review the pool configuration and initial liquidity.

11. Confirm the pool creation.

12. Approve the transaction in your wallet.

Creating a Standard pool

A Standard pool uses the CPMM model and provides liquidity across the full price curve. Powfi supports one Standard pool per token pair.

If no Standard pool exists, review:

• The selected token pair.

• The fixed 0.3% swap fee.

• The initial pool price.

• The initial liquidity amounts.

The initial token amounts establish the starting price of the pool.

Creating a Concentrated pool

A Concentrated pool uses the CLMM model and allows liquidity to be provided within selected price ranges.

When creating a Concentrated pool, review:

• The selected token pair.

• The selected supported swap fee.

• The initial pool price.

• The initial liquidity configuration.

• The price range for the liquidity position, if required during pool creation.

The initial price is particularly important for a Concentrated pool because liquidity positions are created relative to the pool's price.

Existing pool or new pool

A token pair can have one Standard pool and multiple Concentrated configurations. When adding liquidity, make sure you select the specific pool you intend to use.

Using an existing pool allows you to provide liquidity to that pool's existing liquidity and configuration.

Creating a new Concentrated pool creates a separate configuration for the selected token pair. Different Concentrated pools can use different supported fees and other settings.

Swap fee

The swap fee is the fee charged on swaps through the pool.

Standard pools use a fixed 0.3% swap fee. Concentrated pools may offer multiple supported fee configurations.

When creating or selecting a Concentrated pool, verify its fee before confirming.

Adding liquidity to a pool

Liquidity is provided according to the pool's current token ratio.

1. Open the desired pool.

2. Click Add Liquidity.

3. Enter the amount of one token.

4. Powfi calculates the corresponding amount of the other token.

5. Review the deposit amounts.

6. Review your estimated share of the pool.

7. Confirm the transaction.

8. Approve it in your wallet.

Once the transaction succeeds, your liquidity is added to the pool.

As swaps occur, the pool's token balances and ratio change. Your position represents your share of the pool's available liquidity.

Removing liquidity from a pool

You can remove part or all of your liquidity.

1. Open your liquidity position.

2. Click Remove Liquidity.

3. Select the amount or percentage to remove.

4. Review the estimated token amounts.

5. Confirm the transaction.

6. Approve it in your wallet.

The amounts you receive may differ from the amounts you originally deposited because the pool's composition changes as trading occurs.

Liquidity fees

Liquidity providers can earn a share of eligible trading fees generated by swaps through their pool or position.

For CPMM, fees are associated with the pool and reflected through the pool's liquidity mechanics.

For CLMM, fee earnings depend on factors such as:

• Your liquidity amount.

• Your selected price range.

• Trading volume.

• How long the market remains within your active range.

A CLMM position that is outside its active range does not participate in swaps during that period.

Fee mechanics and rates are determined by the specific Powfi pool configuration.

Verification

After creating a pool:

• Confirm the transaction succeeded.

• Verify the token pair.

• Verify the selected swap fee.

• Verify the initial price.

• Confirm the pool appears in Powfi.

After adding liquidity:

• Confirm the transaction succeeded.

• Check that your liquidity position appears in Powfi.

• Verify the deposited token amounts.

• For CLMM, verify the lower and upper price range.

• Check whether the position is currently in range.

After removing liquidity:

• Confirm the transaction succeeded.

• Verify the returned tokens in your wallet.

• Confirm the liquidity position has decreased or closed as expected.

Troubleshooting

The pool price is not what I expected

For a newly created pool, the initial deposit establishes the starting price. Check the token amounts and intended ratio before confirming pool creation.

I selected the wrong pool

A token pair can have one Standard pool and multiple Concentrated configurations. Always verify the pool type and, for Concentrated pools, the fee and other settings.

Deposit amounts changed

For CPMM, required amounts are based on the pool's current ratio.

For CLMM, required amounts depend on the current price and your selected range.

Refresh the quote and review the updated amounts before signing.

My CLMM position is out of range

The current price has moved outside your selected range. Your position remains open, but the liquidity is not currently active.

You can wait for the price to return to the range or manage the position according to your strategy.

My CLMM position contains mostly one token

This can be expected when the current price is close to one of your range boundaries or outside the range.

I received different amounts when removing liquidity

For CPMM positions, the pool composition changes as traders swap between the two assets.

For CLMM positions, the token composition also changes depending on the current price relative to your range.

My transaction failed

Make sure you have enough ALPH to cover Alephium network fees. Refresh the transaction and liquidity quote before trying again.

My liquidity position is not showing

Wait for the transaction to confirm, then refresh Powfi. If the position still does not appear, verify the transaction status and the connected wallet.

Important considerations

Providing liquidity involves market and smart-contract risks.

The value and composition of your position can change as the price of the deposited assets changes. CLMM positions also require you to consider the selected price range and the possibility of becoming inactive when the market moves outside it.

Before depositing significant amounts, make sure you understand:

• The pool's token pair.

• The pool's swap fee.

• CPMM vs CLMM mechanics.

• The risks associated with providing liquidity.

• Your selected CLMM range, if applicable.