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Nomiswap V3 is the first DeFi project to implement concentrated liquidity technology on Binance Smart Chain. The main idea is a unique solution, in which liquidity providers (LP) can choose a certain price range to provide funds to the pool and thus earn more.
With the regular AMMs LP add liquidity for the entire price range (from 0 to infinity). Using Nomiswap V3 providers can add liquidity to a certain price range, where the main trading activity takes place so that liquidity works at maximum efficiency, allowing LP to capture higher profits from trading fees. Narrow ranges earn more fees compared to wider ranges with the same liquidity.
Example: If the price of token Y is 5000 USDT, then the liquidity provider can select a range from 4500 USDT to 5500 USDT, and if the price fluctuates within these limits, then the liquidity will work in full. This allows you to invest much less money, but get the same or more returns.
But there are also some risks: the price may go up or down outside the selected range, then you will not receive a commission, since your liquidity is outside the price range and does not work. If the price has gone beyond the position, then when the liquidity is removed, you will receive only one token — depending on where the price went. And if the price of this token has fallen, you incur losses.
The Nomiswap V3 model is similar to Uniswap V3 but is implemented on BSC.
- 1.Select a pair
First, you have to choose a pair of tokens. Here are all the tokens that are traded on Nomiswap. You can also add any token by entering an address on the BSC network, and it will be found.
After choosing a pair, you will see the “Current pool stats” field, which shows the commission in this pool.
What determines the commission that LP receives?
The commission is not static. If the pool consists of stablecoins and the price doesn't change much, then the fee is less. If the pool has little liquidity, and the price jumps a lot in different directions, which means that the LP bears big risks, then the commission is higher. When creating a new pool, the commission is automatically set to 0.05%. Max commission is 1.5%.
- 2.Select a range
Here you can see the current price and can specify the minimum and maximum price range in which you want to place liquidity.
On the chart, you can see the current price and the percentages that you add. It is possible to set a value outside the price range. For example, if you think that the price will soon go much lower than the market. This is also possible, then the “out of range” box will appear.
- Full range (the maximum range, i.e. from 0 to infinity)
- Safe (-20% - +40%)
- Common (-10% - +20%)
- Expert (-5% - +10%)
- 3.Enter amounts
In accordance with the ranges that you have chosen, according to the algorithm, you set the number of tokens in the appropriate proportion. If the range is on one side of the price (in an out-of-range situation), then you only add one token depending on the side.
- 4.Add liquidity
For the formation of liquidity, LP receives an NFT token. Each NFT token corresponds to the interval for which you will add liquidity. For every position you made, a separate NFT is created. For example, you can have 5 positions with different ranges created on the same pool, then you will have 5 NFTs. NFT is tied to a wallet. When the position is closed, the NFT remains in the wallet, but the liquidity attached to it becomes 0.
How to add liquidity to your opened position?
If the position works well, then using the increase liquidity button, you can add liquidity to an existing position.
How to remove liquidity?
A position works in the same way as an order, only the order closes itself after the expiration of time, and the position needs to be closed. To close a position, you need to click “remove liquidity”. You can remove the liquidity in part or in full. After that, liquidity is transferred to your wallet in the percent that is specified.
If you have removed 100% of liquidity, such a position goes to the “closed” section. With the “hide” button, you can hide closed positions that do not have liquidity.
If users trade on the range that you have chosen, then you receive a commission from them. This fee can be claimed in tokens, depending on which direction the swap occurs. For example, in the NMX-USDT pool, if a user sold USDT, then USDT is accumulated, if NMX is sold, then NMX. The commission is dynamic and depends on what percentage of liquidity in this price range belongs to you. This percentage is indicated at the top, to the right of the pair. If you are the only liquidity provider in this price range, then you will receive the full commission from swaps.
To collect a commission, you need to click the “collect fees” button. At this moment, the accumulated coins will be transferred to the wallet.
The mechanics of swaps is the same as on Nomiswap.
Watch out for fake accounts! The Nomiswap team will never text you first and ask for private keys or individual information!