# How to add liquidity

Decentralized exchanges (DEXs), liquidity refers to the availability and depth of order book for a particular cryptocurrency that is used for trading. DEXs rely on liquidity providers (LPs) who deposit their cryptocurrency into liquidity pools, which are used for swapping and trading among users.

**Adding liquidity to DEXs offers several advantages, including:**

1. Lower slippage: Adding liquidity increases the trading volume in a DEX, reducing slippage. Slippage refers to the difference between the expected and actual trade price, and lower slippage results in more favorable trading outcomes.
2. Trading fees: LPs earn trading fees as a reward for providing liquidity to a DEX. These fees, typically a percentage of the transaction value, can accumulate over time and provide a passive income stream for LPs.
3. Increased market efficiency: Liquidity in DEXs improves market efficiency by facilitating faster and smoother trading. Higher liquidity means traders can easily buy or sell a cryptocurrency without significantly affecting its price, resulting in a more efficient market.
4. Participation in governance: Some DEXs offer governance tokens to LPs, allowing them to participate in the decision-making process of the exchange. This gives LPs a voice in shaping the direction and policies of the DEX.
5. Diversification of holdings: Adding liquidity to different cryptocurrency pairs on a DEX allows LPs to diversify their holdings and spread their risk across multiple cryptocurrencies, mitigating the risk associated with holding a single cryptocurrency.

In summary, adding liquidity to DEXs can offer advantages such as lower slippage, earning trading fees, increased market efficiency, participation in governance, and diversification of holdings. However, it's important to understand the risks associated with providing liquidity, such as potential impermanent loss and market volatility, and carefully consider your risk tolerance and investment goals before participating as an LP in a DEX.

## **How to add liquidity on** Zetachainpa&#x64;**?**

To add liquidity to Zetachainpad Swap, follow these steps:

1. Connect your wallet to Zetachainpad Website
2. Navigate to the Exchange page by clicking "Exchange" in the navigation bar.
3. Look for the "Liquidity" option and click on it.
4. Search for the first token you want to add to the liquidity pool in the list, or you can directly search for its name. If you can't find it, you can paste the token's contract address into the search field to add it to the list. Click on the token's icon or name to select it.
5. You will need to go through this step once again for the second token that you wish to add to the liquidity pool.
6. Enter the amount of one of the tokens you want to add, and the amount of the other token will be instantly calculated to make sure both tokens have the same amount..
7. You may need to enable this token's liquidity in your wallet before you may use it for the first time.
8. To add funds to your wallet, select "Add Liquidity" and approve the associated transaction.

