Deposit Liquidity
Learn how to provide liquidity by using Gamma's Vaults
Last updated
Learn how to provide liquidity by using Gamma's Vaults
Last updated
If you haven't already, download a proper web3 wallet like Metamask, Coinbase Wallet, Trustwallet, or another qualified wallet.
Also, ensure that you have a significant amount of Ethereum (or other gas tokens) in your wallet to cover the gas costs and provide liquidity. You will have several transactions, including purchasing the required tokens, approving each token in the vault to use on Gamma's App, depositing, and eventually withdrawing. If these gas fees are too expensive, consider providing liquidity on an L2 network like Polygon, Optimism, or Arbitrum. Use the link below to evaluate the current market gas costs.
Lastly, ensure you understand vaults and Uniswap V3's concentrated liquidity system. Even though Gamma manages your position, it's still important to understand the basics. Here is some quick reading on the subject:
Our first step in proving liquidity (LPing) is to acquire the tokens for the vault we want to provide liquidity for, but before that, we want to look at what vaults are available on Gamma.
Head on over to Gamma's Apps at:
Uniswap:
Quickswap:
Zyberswap:
This is a good time to connect your wallet. Go ahead and press the red "Connect Wallet" button on the top right corner.
Once connected, you'll be able to browse the vault and networks. In this guide, we'll be using Metamask.
Click on the "Provide Activity Liquidity" box (red) to take you to the dashboard of vaults.
We finally have arrived at the dashboard seen below.
Lots of things are happening here. Don't get overwhelmed! It's pretty simple. We'll go through it piece by piece.
In the top-left-hand corner are your navigation buttons. They take you to the different dApp features, which include LPing, staking, and analytics.
You'll find network controls and your currently connected wallet in the top-right-hand corner. If you're looking to LP on another network like Polygon or Optimism, switch networks now. For the guide here, we'll be staying on Ethereum.
On the top of the box with the vaults, you'll find the "Protocol Stats" bar that tells you some basic statistics about the Gamma system.
Total Value Locked: Also known as TVL, this is the sum of all the funds providing liquidity in the Gamma system at the current time. At the time of this guide, there are $11.36 million dollars providing liquidity in Gamma. Total Fees Accrued: This is the cumulative sum of all the fees produced by providing liquidity in Gamma. Fee-Based APR: This is the total fees produced compared to the total value locked, extrapolated to a yearly projection at the given time. This value describes the performance of all the vaults combined compared to the TVL. Protocol Fees APY: This is the total fees produced per GAMMA staked to a yearly projection at the given time. This value includes a projection for compounding GAMMA returns. This value describes the performance of staking GAMMA.
On the dashboard, you'll find a link to our Legacy V1 system (NFT Vaults). You only need to go here if you have current deposits in this system. You cannot deposit anymore, only withdraw.
Finally, we have the vaults. Here you'll find all the options available to you for LPing.
Today, we're going to deposit into WBTC-WETH 0.05%.
This is a critical and often overlooked step. Gamma uses something called "dual-sided" deposits. You're going to be depositing two separate tokens.
Single-sided deposits are not available right now.
As such, we'll need both tokens. But how much of each? Well, it depends on how the vault is balanced at the given time. Ideally, the vault is close to 50-50, but that's not always the case. If you want to optimize your deposit, we will want to compare the ratio of the assets in Gamma's vaults. There's a quick and easy way to do this.
It all starts with picking a vault you are interested in. In this case, we're going to look at WBTC-WETH.
Note: the UI will show your available funds, which can be used to determine how much each token you can or need to make a deposit. Inputting a number automatically calculates the other number. "Max" will set the maximum amount of funds in your wallet.
Let's try seeing what ratios we get with one of each token.
Maxing WBTC gives us an acceptable ratio of WBTC to WETH needed to deposit.
Maxing WETH does not, as it requires too much WBTC.
Note the error message tha pops up on the UI. It will inform you when there is a problem.
Is this pool's ratio 50-50? Clearly not. Let's find out what it is. Open another tab and head on over to Uniswap V3's info page.
This is an excellent opportunity to evaluate the vault you will be depositing into. Uniswap's analytics should provide us with some basic information.
Type your tokens into the search bar. In this case, "WBTC" would find the pair fastest. Take care to remember the fee tier of the pool. It's on the Gamma vault under the details.
When searching, several pools may come up. We want to choose the corresponding fee tier highlighted in the red box.
Now we're at the analytics page for the WBTC-ETH 0.05% pool.
Information overload again! Let's break it down.
The first thing we see is the ratio of the pairs. They don't match up! That means the deposit on into the Gamma WBTC-ETH vault is not going to be 50-50.
In this example:
1 WBTC = 12.9623 ETH, but Gamma allows a deposit of 1 WBTC to 1.118 ETH 1 ETH = 0.0771 WBTC, but Gamma allows a deposit of 1 WBTC to 0.9055 ETH
At the time of this guide, 1 WBTC is approximately $20,490, while one ETH is $1,580.
$20,490 + (1.118 * $1,580) = $22,256 = ratio of 92-8 WBTC-WETH
$1,580 + (0.9055 * $20,490) = $20,133 = 92-8 WBTC-WETH
The current ratio is approximately a 92-8 ratio to WBTC-WETH.
So you'll need more BTC than ETH. You'll want to purchase in those ratios to minimize the number of leftover tokens not put toward the liquidity vault.
While here at Uniswap, we can evaluate some statistics and get the tokens to deposit into the vault.
Now that we've evaluated all the analytics of the WBTC-WETH pair and we've connected to both Gamma's App and have Uniswap open and ready, we need to purchase any of the assets we don't have. On Uniswap V3, click the "Trade" button in the top-left corner.
By now, this should be pretty familiar to you. We'll go ahead and purchase some WBTC as a demonstration.
Switch back to the Gamma App and begin the process of depositing.
The first thing we are asked to do is wrap ETH. This is normal if you don't have Wrapped ETH (WETH) in your wallet.
You can learn more about Wrapped ETH below.
https://cointelegraph.com/news/what-is-wrapped-ethereum-weth-and-how-does-it-work
Once wrapped, you can move on to the token approvals. You must do this every time for security purposes.
You know that you are ready to deposit when you see the deposit button on your user interface. Press "Deposit" to proceed. This will be the largest and most expensive transaction.
After depositing, you can see your wallet balances have changed.
Likewise, you are able to access an LP position to withdraw.
Back on the dashboard, you can see your LP position as well.
Let's double-check the transaction on etherscan. You can look directly at your wallet by doing to etherscan.io, but let's take a shortcut through metamask.
Click on the last transaction in Metamask, and bring up the details
Click on "View on Block Explorer". You'll be taken to etherscan.
In this window, you'll see lots of information. The contract you interacted with (blue box). The transaction amounts (red box), and how the transaction process works.
Now that you have LP tokens. You can withdraw them to exit your position or interact with more advanced features like incentive progams.
