This content is for educational purposes only and does not constitute financial advice. Always do your own research before making any investment decisions.

The Radix Rewards Campaign is live, and DeFiPlaza offers a unique way to earn Activity Points through liquidity provision. Provide liquidity to supported pools and earn points toward your share of 1 billion XRD. DeFiPlaza features distinctive characteristics including their CALM (Concentration-Asymmetric Liquidity Model) algorithm and single-sided liquidity options.

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What You'll Need

Before you start providing liquidity on DeFiPlaza, make sure you have:

• Radix Wallet downloaded and set up (get it here)
• XRD tokens for transaction fees
• Supported tokens to provide as liquidity - Bridge via Astrolescent
• Enrolled accounts in the Radix Rewards program
• Minimum $50 worth of XRD/LSU holdings across all linked accounts

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Supported Liquidity Pairs That Earn Points

You'll earn Activity Points (AP) specifically when you provide liquidity to supported pools on DeFiPlaza.

Important: Always make sure to visit the Rewards dashboard to see what assets, pairs, and pools earn you points: https://incentives.radixdlt.com/dashboard/earn 

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Step-by-Step Liquidity Provision Guide

Step 1: Access DeFiPlaza

1. Go to radix.defiplaza.net/liquidity/add
2. Connect your Radix Wallet using the "Connect Wallet" button
3. Approve the connection in your mobile wallet

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Step 2: Navigate to the Liquidity Section

1. Locate your desired pair in the "Pools" section
2. Click on "Add" to start adding liquidity

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Step 3: Choose Your Liquidity Type

DeFiPlaza offers different liquidity provision options:

• Single-sided liquidity: Provide just one token type (unique feature that reduces exposure to multiple tokens)
• Multi-token liquidity: Provide multiple tokens to the pool

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Disclaimer: Although DeFiPlaza supports single-sided liquidity, some pools may require two tokens for technical or efficiency reasons. Learn more about this here.

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Step 4: Select Your Token(s) and Amount

For Single-Sided Liquidity:

1. Select your chosen token in the "Token" section (Asset B)
2. Input your desired amount of that token
3. Review the amounts to ensure you're satisfied with your position

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For Double-Sided Liquidity:

1. Input your desired amount for the first token (Asset A)
2. The required amount of the second token (Asset B) will adjust automatically in real-time
3. Review both amounts to ensure you're satisfied with your position

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Step 5: Execute Your Liquidity Provision

1. Click "Add Liquidity"
2. Review the transaction details in your Radix Wallet
3. Approve the transaction in your mobile wallet
4. Wait for the transaction to confirm

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Step 6: Verify Your Liquidity Position

1. Check your Radix Wallet to confirm you received LP tokens. These will appear in the "Pool Units" section of your wallet
2. Your liquidity provision will automatically generate Activity Points in the incentives system
3. Monitor your position and points progress in the Radix Rewards dashboard

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Understanding DeFiPlaza's Single-Sided Liquidity

DeFiPlaza's single-sided liquidity is more complex than it initially appears. Here's how it actually works:

Internal Dual-Pair System: When you provide single-sided liquidity, DeFiPlaza internally creates two pairs for each token. For example, if you're providing single-sided liquidity to token A, the system creates one A/B pair for token A providers and another A/B pair for token B providers.

Fair Distribution Mechanism: This setup ensures that when trades occur, the impact is fairly distributed among liquidity providers. Without this system, single-sided liquidity providers could be unfairly penalized when their specific token is traded.

Why You Still Need Both Tokens: When adding additional liquidity to an existing single-sided position, you may need to provide a small amount of the paired token to maintain fairness for all liquidity providers. This prevents any single provider from receiving disproportionate LP tokens.

Example: If you initially provide 100 tokens of Asset A, and later someone trades, your position might become 90 of Asset A and 10 of Asset B. When you want to add more liquidity, you'll need to maintain this ratio to keep the system fair for everyone.

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Understanding DeFiPlaza's Liquidity Features

CALM Algorithm: The Concentration-Asymmetric Liquidity Model is designed to treat trades that increase impermanent loss differently from those that reduce it, potentially helping to mitigate some impermanent loss risks.

Multi-Token Pool Design: DeFiPlaza uses multi-token pools rather than traditional pair-based systems, which creates different liquidity dynamics.

Annualized Liquidity Return (ALR): Instead of traditional APY, DeFiPlaza uses ALR, which measures the performance of providing liquidity compared to simply holding the tokens. ALR considers both trading fees earned and impermanent loss, giving you a clearer picture of your liquidity provision performance.

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Pro Tips for Liquidity Providers

Understand Single-Sided Complexity: While single-sided liquidity reduces exposure to multiple tokens, remember that the system may still require small amounts of the paired token when adding additional liquidity.

Monitor ALR Performance: Track your Annualized Liquidity Return to see how your liquidity provision performs compared to simply holding tokens.

Consider Your Time Horizon: Activity Points are calculated based on time-weighted liquidity provision, so longer-term provision may be more beneficial for point earnings.

Track Your Position: Monitor both your LP token value and your Activity Points accumulation regularly.

Compare with Other Platforms: Since you're earning the same incentive points across different DEXs, consider comparing liquidity provision experiences across the Radix ecosystem.

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How Points Are Earned from Liquidity Provision

When you provide liquidity to the supported pairs on DeFiPlaza, you earn Activity Points based on the USD value of liquidity provided over time. Here's how it works:

Weekly Conversion Process:

1. During the week: Provide liquidity → Earn Activity Points (AP)
2. End of the week: AP converts to Season Points (SP) based on your ranking vs others. Your SP is then multiplied by your XRD/LSU holding bonus (0.5x to 3x)

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The longer you provide liquidity and the larger the USD value, the more Activity Points you'll earn. For example, providing $500 worth of liquidity for a full week will earn significantly more points than providing $100 for the same period.

For a detailed explanation of how the point system works, check out our complete guide: ELI5: How You Earn Points for the 1Bn XRD Airdrop

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Important Reminders

Enroll First: Make sure you've enrolled in the Radix Rewards program and linked your liquidity provision accounts

Minimum Holdings: You need at least $50 worth of XRD/LSU across all linked accounts to start earning points

Supported Pairs Only: Only incentivised pairs earn points on DeFiPlaza. Click here to see what is being incentivised

Weekly Rankings: Points are calculated weekly based on your time-weighted liquidity provision

Impermanent Loss Risk: While DeFiPlaza's CALM algorithm aims to reduce impermanent loss, providing liquidity still carries this risk

Single-Sided Complexity: Remember that single-sided liquidity may still require small amounts of paired tokens when adding additional liquidity

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Understanding Impermanent Loss and DeFiPlaza's Approach

Impermanent loss is a key consideration when providing liquidity to any DEX. It occurs when the price ratio between tokens in a pool changes compared to when you first provided liquidity.

DeFi Plaza's CALM algorithm is specifically designed to address this challenge by treating different types of trades differently. While this doesn't eliminate impermanent loss entirely, it represents a different approach compared to standard AMM models.

Key considerations:

• Impermanent loss can still occur despite the CALM algorithm
• Single-sided liquidity provision may have different impermanent loss characteristics
• Monitor your positions regularly and understand the risks involved
• ALR metrics help you track actual performance including impermanent loss effects

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DeFiPlaza's Key Features for Liquidity Providers

DeFiPlaza offers several unique characteristics in the Radix ecosystem:

• CALM Algorithm: A different approach to handling impermanent loss compared to standard AMMs
• True Single-Sided Liquidity: Ability to provide liquidity with primarily one token type, using internal dual-pair mechanics
• ALR Metrics: Performance tracking that considers both fees and impermanent loss
• Concentrated Liquidity Elements: Incorporates some concentrated liquidity concepts with risk mitigation

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Next Steps

Now that you know how to provide liquidity on DeFiPlaza for incentive points, consider exploring:

• Other liquidity provision opportunities on Ociswap and CaviarNine to compare experiences and diversify your liquidity provision
• Lending platforms like Root or WEFT for additional point categories
• Different liquidity strategies across various platforms to maximize your weekly rankings and point earnings

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Ready to start providing liquidity on DeFiPlaza? Head over to DeFi Plaza and provide liquidity to the supported pairs. Remember to provide liquidity responsibly and within your risk tolerance.

Have questions about DeFiPlaza? Join them on Telegram or follow them on X for updates on platform developments and features.

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