Create Liquidity Pool

HOW TO CREATE A LIQUIDITY POOL IN 5+1 STEPS

If you want to create a Liquidity Pool for a Token this post is for you. We are going to show you how to create a Liquidity Pool for a Token in just 5+1 steps.

Select your lockchain to see the step-by-step tutorial

Before we start with the tutorial let's see what is a liquidity pool and if it is a good decision to create one for your token. Then we start directly with the step by step on each lockchain, let's go for it.

WHAT IS A LIQUIDITY POOL

A Liquidity Pool is a set of funds that allows any user to buy and sell the tokens that make up that set of funds.

This set of funds is created by grouping two tokens that form a "pair" and leaving an amount of them in exchange. Thanks to this amount of funds, other users can exchange the tokens that form this pair.

Usually, at least one of the tokens forming the pair has a set value (USDT, ETH, SOL, USDC, etc.), thus allowing the other token in the pair to acquire a price.

Thanks to this any user can buy tokens (which he takes from this liquidity pool) in exchange for another token that has a set value (which he puts into the liquidity pool). Also any user can sell tokens (by depositing them in the liquidity pool) and receive the other token (which he takes from the liquidity pool). Supply and demand, trading, everything starts with a liquidity pool.

FACTS TO TAKE INTO ACCOUNT WHEN CREATING LIQUIDITY POOLS

Before starting with the creation of the Liquidity Pool , let's look at 4 factors that will help us define our decisions.

1. CREATING A LIQUIDITY POOL IS NOT FREE

To create a liquidity pool we must deposit tokens, and usually one of them will be a Stablecoin or a Token such as ETH, SOL, MATIC or BNB, so we must make an investment in adding enough liquidity if we want it to be maintained.

In addition, the creation of this liquidity pool in an exchange is not free. We will have to pay certain fees that vary depending on the lockchain where we create the liquidity pool.

2. THE TOKEN PAIR OF OUR POOL IS FIXED

We must be clear that after creating a token pair and adding liquidity we will not be able to change the tokens that make it up. We can create a new pair and add liquidity to it, but we will lose the fees paid in error.

3. IMPORTANCE OF CREATING LIQUIDITY WITH STABLECOIN

We must understand that when we create a token pair with a token whose price fluctuates, the price of our token will also fluctuate. That is why it is important to take this into account and decide whether it is more convenient for us to create liquidity with a stablecoin.

If we use a stablecoin, its price will not fluctuate, so the price of our token will depend on its demand. The more purchases, the price will go up, the more sales, the price will go down.

4. CREATING A LIQUIDITY POOL IS RISKY

Creating a liquidity pool implies that the price of our token will fluctuate. It is very important that we are aware of the risk involved, since if the price sinks too much, our project will probably have the same result.

Think if this is the best option or other options are better for us. We recommend creating a liquidity pool if we are sure that we can maintain a healthy economy.

Select your lockchain to see the step-by-step tutorial

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Ethereum Liquidity Pool

HOW TO CREATE AN ETHEREUM TOKEN LIQUIDITY POOL

In Ethereum, we have dozens of Exchange Platforms in which to create a liquidity pool with our Token. But in this case, we will stay with Uniswap, undoubtedly the DEX with the highest volume of users in the entire lockchain.

Here you have 2 options, use Smithii's Create Ethereum Liquidity Pool dApp or go directly to Uniswap, our interface is simpler and is audited, so we recommend it, however we are going to tell you about the 2 options:

1. CREATE ETHEREUM LIQUIDITY POOL USING SMITHII

Let's go to the Create Liquidity Pool on Ethereum online tool (https://tools.smithii.io/liquidity-pool/ethereum), make sure you have the Ethereum lockchain selected and connect your preferred wallet.

1. Connect your wallet to the dApp Create Liquidity Pool in Ethereum.
2. Choose the "Base Token" (the one that defines the price, usually $ETH, $USDT, $USDC, etc.)
3. Choose the "Quote Token", this is your token ready to go to market.
4. Add Liquidity, choose the Base Token and Quote Token amounts to be matched, this defines the initial price of your token.
5. Click on "Create Liquidity Pool" and accept the transactions.

Seconds later you will have your Liquidity Pool created, it is launched in Uniswap, you can go there to see it. The cost of creating an Ethereum liquidity pool in Smithii is 0.001 ETH which includes the fees for the token pair creation and the liquidity pool.

If you don't have your token yet, here's how to create your own ERC20 token without programming

2. CREATING LIQUIDITY POOL IN UNISWAP

To start with the creation of our Liquidity Pool we accessdirectly to the Uniswap app and connect our wallet. From there in the main menu we will see access to "Pools" (Remember to select the Ethereum network in the dropdown at the top right).

In this section, we can manage the liquidity pools we have, and also createa new liquidity pool within Uniswap.

Therefore we click on the "New Position" button to start the process.

2.1 CREATING A PAIR OF ETHEREUM TOKENS

To create our liquidity pool the first thing to do is to create a token pair. In this case, we first select the token with "value" in dollars. For what we have previously discussed I will select USDT, since it is a stablecoin.

We continue by selecting our token, copythetokenaddress and paste it in the searchbar, then you can select it. It is normal that a warning message appears, since it is the first time that a liquidity pool is created with our token.

2.3. SELECT THE COMMISSION OF YOUR LIQUIDITY POOL

Our next step will be to select the fee percentage that each transaction will have through our liquidity pool. To do this, we click on "Edit" Fee Tier.

We will see 4 options to choose from. The most common and recommended according to Uniswap, is 0.3%.

2.4. SETTING STARTING PRICE AND PRICE RANGE

As this is the first time we create a liquidity pool with the created token pair, we must set the starting price. That is, the price at which users will be able to trade, thanks to our liquidity pool. In addition, we will set the price range.

Regarding the starting price simply indicate the one you consider optimal, it is recommended to prepare a complete tokenomics to follow a strategy.

If we talk about the price range, it is important to emphasize that our liquidity pool will ONLY be active in the range we set. That is, if the token's price is above or below the range that we indicate, our liquidity pool will remain inactive and will not be acting.

Remember that the starting price has to be within the price range we set.

2.5. DEPOSIT LIQUIDITY

Once the price range is set , it is time to deposit the liquidity of the token pair. We can decidehow much toadd. Remember to add enough so that users can trade normally without an excessively low limit.

If you create a token from 0 and do not want to add much liquidity, the most common is to start with a VERY low price, so the liquidity scales with the token's price.

2.6. CREATING AN ETHEREUM LIQUIDITY POOL

When we have completed all the above steps, we can complete the process by clicking on the "Approve" button and confirming the transaction.

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Solana Liquidity Pool

HOW TO CREATE A SOLANA TOKEN LIQUIDITY POOL

If you have or are going to create a token in Solana, the option of creating a liquidity pool is very interesting. We have several DEX where to create it, although the most common and recommended is Raydium. Let's go directly to the step-by-step tutorial on creating a liquidity pool in Solana without further ado.

If you prefer the video version this is for you:

Here we explain how to create a Solana SPL Token.

CREATE OPENBOOK MARKET

We start our process directly from Smithii Tools in the "Create OpenBook Market" section: tools.smithii.io/openbook-market/solana and connect our wallet.

Basically, creating a market means that we will create a token pair with which we can later create the liquidity pool.

To create an "optimal" OpenBook Market we will have a cost of 2.8 SOL, but we can also modify the size of this Market ID to make it cheaper, starting at 0.4 SOL.

In summary, the main problem that can generate a cheap Marker ID would be that our token has many transactions and that a percentage of them give error because they are not processable by our marketplace.

Although under experiences shared with Smithii, to create memecoins that do not reach more than 500k MarketCap there is no problem.

Take it into account and decide what you prefer, but to create a serious project I recommend you not to skimp on expenses.

To start we must select the tokens that will form the pair. In "Base Token" we will select the token that we have created and has no value in the market yet.

We continue selecting the "Quote Token", that is, the token with value, I recommend using SOL or USDC.

We continue with the minimum price modification, that is, the minimum price that will vary the price of our token. The most recommended according to Raydium is to set 0.000001 if we have previously set 100.

These numbers are for reference, taking as the average a token with 100M supply. You can follow any of the data in the following table for your OpenBook Market.

Before finishing we can activate "advanced options" to modify the size of our OpenBook Market, I leave you the inputs that you should use for 3 different sizes that I can recommend, always taking into account the potential errors that can generate.

To finish, we will click on "Create Market" and confirm the transaction, which will be between 2.5 and 5 SOL. Once this is done, we will obtain the "OpenBook Market ID" that we will copy to go to the next step.

2. CREATE LIQUIDITY POOL SOLANA

Once the market is created in Raydium, we can proceed directly with creating the liquidity pool. It is important to note that you can only create the liquidity pool if your token is "Freeze", that is, it has limited the creation of more tokens, so its maximum supply is definitive.

To do so you can go to this page, select your token and complete the process. The cost is only 0.1 SOL.

Having this clear, we have to access directly to the section to create pools in Raydium: raydium.io/liquidity/create/ and  connect our wallet.

Here we paste the "OpenBook Market ID" that we have previously copied and click on confirm.

We continue with one of the key sections: setting the initialprice of our token and addingliquidity to the pool.

Regarding the starting price simply indicate the one you consider optimal, it is recommended to prepare a complete tokenomics to follow a strategy.

Continue indicating the amount of liquidity of each token you are going to deposit, remember to have enough in your wallet.

Finally, select the date of publication of the liquidity pool and click on confirm.

After clicking on the button we will have to confirm 2 transactions, then we will see the IDofourliquiditypool (so we can easily search for it) and we will have finished the process. Now our Solana liquidity pool is created.

This liquidity pool will remain active on the page we entered at the beginning of this second step.

CREATE SOLANA LIQUIDITY POOL IN 1 STEP

With Smithii's dApp "Create Liquidity Pool" you can do it in 1 step, i.e. create the Openbook Market + Liquidity Pool in one step. Go to https://tools.smithii.io/liquidity-pool/solana and you will find the following view:

This tool allows us to create our liquidity fund in Raydium with a friendly user interface and from only 1 SOL (up to 3.5 SOL depending on the configuration you use).

You can choose to create the liquidity pool under raydium v2 or v3 protocol, if you want to know the differences we tell you about it in our comparison, but now we will continue with v2.

1. Go to Create liquidity group ( https://tools.smithii.io/liquidity-pool/solana ) and connect your wallet to use the tool.
2. Select the "Base Token" (the token you created and has no market value yet).
3. Select theQuote Token (a token with market value, usually SOL or USDC).
4. Set the "Min Order Size" (Minimumamount of tokens that users will be able to purchase).
5. Set the "Tick Size" (Minimum amount that can change the price of your token)*.
6. Set advanced options: Event Queue Length, Request Queue Lenght and Orderbook Lenght (only if you want to use a cheap Market ID, from 0.4 SOL)**.
7. Set the number of tokens and SOL/USDC to be added.
8. Set launch date (optional)
9. Snipe your Own token (optional)
10. Click on "Create Liquidity Pool" and accept the 3 transactions.

It will take a while to complete and then you will see the market ID and the address of the liquidity pool. Save them, as you may need the addresses for future use.

Sniper your Token is a highlight of Smithii's Liquidity Pool creation tool, you will have a better chance of preventing your token from being exploited by third-party sniper bots.

*You can use this chart as a reference for Min Order Size and Tick Size:

**In "advanced options" we can modify the size of our OpenBook Market, I leave you the inputs that you should use for 3 different sizes that I can recommend you:

If you want to list your token in Jupiter Exchange here is how to add a token to Jupiter.

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Base Token Liquidity Pool

HOW TO CREATE A BASE TOKEN LIQUIDITY POOL

We can select several exchange platforms for the liquidity pool of our base token. But in this case we will stick with Uniswap, the most chosen DEX with the highest volume of ERC20 Layer 2 lockchain users.

Here you have 2 options, use Smithii's Create Base Liquidity Pool dApp or go directly to Uniswap, our interface is simpler and is audited, so we recommend it, however we are going to tell you about the 2 options:

1. CREATE BASE LIQUIDITY POOL USING SMITHII

Let's go to the Create Liquidity Pool on Base online tool (https://tools.smithii.io/liquidity-pool/base), make sure you have the Base lockchain selected and connect your preferred wallet.

1. Connect your wallet to the dApp Create Liquidity Pool in Base
2. Choose the "Base Token" (the one that defines the price, usually $WETH, $USDT, $USDC, etc.)
3. Choose the "Quote Token", this is your token ready to go to market.
4. Add Liquidity, choose the Base Token and Quote Token amounts to be matched, this defines the initial price of your token.
5. Click on "Create Liquidity Pool" and accept the transactions.

Seconds later you will have your Liquidity Pool created, it is launched in Uniswap, you can go there to see it. The cost of creating a Base liquidity pool in Smithii is 0.001 WETH which includes the fees for the creation of the token pair and the liquidity pool.

If you don't have your token yet, here's how to create your own Base token without programming.

2. CREATING LIQUIDITY POOL IN UNISWAP

To start with the creation of our Liquidity Pool we access directly to the Uniswap app and connect our wallet. From there in the main menu we will see the access to "Pools" (Remember to select the Base network in the dropdown on the top right).

In this section, we can manage the liquidity pools we have, and also createa new liquidity pool within Uniswap.

Therefore we click on the "New Position" button to start the process.

2.1 CREATE BASE TOKEN PAIR

To create our liquidity pool the first thing to do is to create a token pair. In this case, we first select the token with "value" in dollars. For what we have previously discussed I will select USDT, since it is a stablecoin.

We continue by selecting our token, copythetokenaddress and paste it in the searchbar, then you can select it. It is normal that a warning message appears, since it is the first time that a liquidity pool is created with our token.

2.3. SELECT THE COMMISSION OF YOUR LIQUIDITY POOL

Our next step will be to select the fee percentage that each transaction will have through our liquidity pool. To do this, we click on "Edit" Fee Tier.

We will see 4 options to choose from. The most common and recommended according to Uniswap, is 0.3%.

2.4. SETTING STARTING PRICE AND PRICE RANGE

As this is the first time we create a liquidity pool with the created token pair, we must set the starting price. That is, the price at which users will be able to trade, thanks to our liquidity pool. In addition, we will set the price range.

Regarding the starting price simply indicate the one you consider optimal, it is recommended to prepare a complete tokenomics to follow a strategy.

If we talk about the price range, it is important to emphasize that our liquidity pool will ONLY be active in the range we set. That is, if the token's price is above or below the range that we indicate, our liquidity pool will remain inactive and will not be acting.

Remember that the starting price has to be within the price range we set.

2.5. DEPOSIT LIQUIDITY

Once the price range is set , it is time to deposit the liquidity of the token pair. We can decidehow much toadd. Remember to add enough so that users can trade normally without an excessively low limit.

If you create a token from 0 and do not want to add much liquidity, the most common is to start with a VERY low price, so the liquidity scales with the token's price.

2.6. CREATE A BASE LIQUIDITY POOL

When we have completed all the above steps, we can complete the process by clicking on the "Approve" button and confirming the transaction.

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Polygon Liquidity Pool

HOW TO CREATE POLYGON TOKEN LIQUIDITY POOL

Polygon has hundreds of DeFi platforms that support Matic. But without a doubt, the best option to create a liquidity pool in Polygon is Uniswap, we are going to explain you how to create it step by step.

1. CREATE UNISWAP LIQUIDITY POOL

To start with the creation of our Liquidity Pool we access directly to the Uniswap app and connect our wallet. From there in the main menu we will see the access to "Pools" (Remember to select the Polygon network in the dropdown at the top right).

In this section we can manage the liquidity pools we have, and also create a new liquidity pool within Uniswap.

Therefore we click on the "New Position" button to start the process.

2. CREATE PAIR OF POLYGON TOKENS

To start creating our liquidity pool, we must create a token pair with our token and another token with a set dollar value, I recommend a stablecoin.

We continue by selecting our token, copy the token address and paste it in the search bar, then you can select it. It is normal that a warning message appears, since it is the first time that a liquidity pool is created with our token.

3. SELECT FEES LIQUIDITY POOL

We continue by selecting the percentage of commission that each transaction made with the tokens of our liquidity pool will have. To do this, we click on the "Edit" button where it says FeeTier.

We will see 4 options. The most frequent and recommended, according to Uniswap, is 0.3%.

4. STARTING PRICE AND PRICE RANGE

As this is the first time we will create a liquidity pool with the selected token pair we must select the starting price for our token. That is, the "launch" price of the token so that users can trade it. We must also set the price range.

Regarding the initial price indicate the one you consider optimal, it is recommended that you prepare a tokenomics with a plan to follow in order to maintain a healthyeconomy.

As for the price range, it establishes when our liquidity pool will remain active. That is, if the token's price is higher or lower than the established range, our liquidity pool will remain inactive.

Knowing this, we should set a fairly wide price range to let the market act independently. It is important that the initial price should be within the price range.

5. ADD LIQUIDITY

When we have established the price range we will add liquidity with the token pair. We will decide how much liquidity to add, but remember to deposit enough so users can trade without a small limit.

If you are creating the liquidity pool of a newly created token and do not want to add much liquidity, set a VERY low price, so we let the liquidity scale parallel to the price of the token.

6. CREATE POLYGON LIQUIDITY POOL

When we have completed all the above steps, we complete the process by clicking on the "Approve" button and confirming the transaction.

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Binance Smart Chain Liquidity Pool

HOW TO CREATE A BINANCE SMART CHAIN (BSC) TOKEN LIQUIDITY POOL

Binance Smart Chain has hundreds of places to create a liquidity pool for your token. But without a doubt, the most used and most popular BSC DEX is PancakeSwap, so it is our best choice for our liquidity pool.

1. CREATE LIQUIDITY POOL PANCAKESWAP

We create our liquidity pool directly from the PancakeSwap website in the "Liquidity" section:pancakeswap.finance/liquidity and connect our wallet.

In this screen we simply click on the "Add Liquidity" button.

2. CREATE A TOKEN PAIR ON BINANCE SMART CHAIN

The first thing we must do to create our liquidity pool in Pancake Swap is to create a token pair consisting of our token and another token that has a set dollar value (we recommend using a stablecoin).

Therefore we select the token with the value of our choice, in this case, we are going to use BUSD. We continue selectingourtoken, to do that we paste in the search bar its address, it is normal that a risk warning appears.

3. SELECT FEES LIQUIDITY POOL

Now we have to select the percentage of commission that we will receive on each transaction made through our liquidity pool.

To do this, we simply click on the option we want, the most common is 0.25%.

4. STARTING PRICE AND PRICE RANGE

As this is the first time we create a liquidity pool with the token pair we have chosen, we have to choose the initial price for our token. We also have to set the price range in which our liquidity pool will be active. If the price is higher or lower than the set price, it will remain inactive.

We continue directly indicating the starting price, there is no recommendation, simply prepare your strategy and tokenomics to achieve a healthy economy.

For the price range, it is convenient to set it moderately wide, so we let the market act and manage the price. Remember that the initial price must be within the price range.

5. ADD LIQUIDITY

After setting the initial price and price range, we need to add liquidity of the selected token pair. We can decide how much liquidity we want to add, but it is important to add enough so the trading limit is not too small.

If you are creating the liquidity pool of a newly created token and do not want to deposit a lot of liquidity, set a VERY low price, so we let the liquidity scale parallel to the token's price.

6. CREATE A LIQUIDITY POOL BNB SMART CHAIN

When we have completed all the above steps, we complete the process by clicking on the "Allow Token" buttons, approve the transactions. Finally click "Add" and confirm the transaction.

FREQUENTLY ASKED QUESTIONS ABOUT CREATING A LIQUIDITY POOL

Finally, let's take a look at some of the most recurrent doubts when considering the creation of a liquidity pool:

Can I create my own liquidity pool?

Yes, you can create your own liquidity pool on decentralized exchanges (DEX) such as Uniswap for ERC20 and ERC20 layer 2; Raydium for Solana or PancakeSwap for BSC. A liquidity pool allows you to deposit tokens into a smart contract, which facilitates the exchange of these tokens by other users. Creating a liquidity pool is a straightforward process that requires no programming knowledge, although a basic understanding of decentralized finance (DeFi) is helpful.

How much does it cost to create a liquidity pool?

The cost of creating a liquidity pool varies depending on the platform you choose and the lockchain on which it operates. Typically, you'll need to pay a gas fee to deploy the smart contract and add liquidity, which can range from a few dollars to several hundred, depending on network congestion. In addition, you'll need to provide an initial amount of tokens to fund the pool.

How do you provide liquidity to a pool?

Providing liquidity involves depositing two types of tokens into a liquidity pool in equal parts in value. For example, in Uniswap, you could deposit ETH and an ERC20 token. When you do this, you will receive liquidity provider (LP) tokens, which represent your participation in the pool and which you can redeem for your initial deposit plus a portion of the transaction fees generated by the pool.

How to create an LP (Liquidity Pool)?

Creating an LP involves selecting a DEX, connecting your wallet, choosing the tokens you wish to pair and then depositing them into the pool. The platform will guide you through each step, ensuring that you provide the same value of both tokens. After confirming the transaction, your liquidity pool will be active and you will receive LP tokens as proof of your contribution.

How to make an LP?

Making an LP is the same as creating a liquidity pool. It requires depositing two assets into a DEX smart contract. The process is automated, with the DEX handling the technical aspects. Your role is to choose the token pair, make sure you have enough balance and confirm the transaction, which will generate LP tokens for you.

How to create a liquidity pool smart contract?

If you have programming skills, you can create a custom smart contract for a liquidity pool by coding in a language like Solidity for Ethereum-based projects. However, most users rely on existing DEX platforms that offer built-in tools to create liquidity pools without writing code, or better yet audited platforms like Smithii that provide online tools with an intuitive interface that makes the process of creating your Liquidity Pool easy.

How are liquidity pools created?

Liquidity pools are created when a user or group of users deposit pairs of tokens in a smart contract in a DEX. This contract holds the tokens and facilitates exchanges between them, with prices determined by the proportion of tokens in the pool. Users contributing to the pool earn transaction fees as a reward for their contribution.

CONCLUSION

Now you have all the information you needed to create your liquidity pool, evaluate if it is worth doing it or not and if the answer is yes ... You have no excuse to take your token To The Moon!

Thanks for reading us!