What is Zap In?
“Zap In” is a feature on Minswap that simplifies adding liquidity to a liquidity pool (LP) by automatically converting a single asset into the necessary pair of tokens. In traditional decentralized exchanges (DEXs), providing liquidity requires a user to supply equal amounts of two different tokens for the specific liquidity pool. Zap In streamlines this process by allowing users to deposit a single token, and the platform handles the conversion into the appropriate token pair.
This is very useful when you want to provide liquidity into a pool of a new token that you do not yet have.
How Does Zap In Work?
- Select a Pool: The user selects the liquidity pool to which they wish to contribute. For example, a user may want to provide liquidity to a ADA/USDM pool.
- Single Token Deposit: Instead of needing to deposit both ADA and USDM in equal values, the user can use the Zap In feature to deposit only ADA or only USDM.
- Automated Conversion: The Zap In feature automatically swaps half of the deposited token (e.g., ADA) into the other token needed for the pool (e.g., USDM) via a decentralized exchange. This happens in the background, simplifying the process for the user.
- Liquidity Provision: After the conversion, the two tokens are added to the liquidity pool, allowing the user to become a liquidity provider (LP) and earn rewards from trading fees or incentives tied to the pool.
Benefits of Zap In
- Convenience: Users no longer need to manually swap tokens before adding liquidity, saving time and reducing complexity.
- Reduced Transactions: Normally, adding liquidity involves multiple transactions (swapping one asset for another and then adding liquidity). Zap In reduces this to a single transaction, lowering transaction fees and streamlining the process.
- Lower Slippage Risk: By handling the swap in one step, Zap In reduces the chances of experiencing high slippage when converting one token to another, especially in volatile markets.
- Enhanced User Experience: For users unfamiliar with liquidity pools or token swaps, Zap In makes the process more accessible by simplifying liquidity provision to a few clicks.
Use Case Example
Let’s say you hold ADA and want to provide liquidity to the ADA/USDM pool. Instead of manually swapping half of your ADA for USDM and then providing both tokens to the pool, Zap In allows you to deposit ADA. The system automatically converts half of the ADA into USDM and provides both tokens to the pool in the correct ratio, allowing you to start earning liquidity rewards immediately.
How to Zap In Liquidity
Follow these steps to learn how to easily zap liquidity into a liquidity pool. In this example, we will be using ADA and Djed trading pair. This tutorial assumes you have your wallet setup and have it funded with ADA.
total time: 10 minutes
Select a token to provide liquidity
From the home page of the Minswap website, click on “Market” and choose the trading pair you wish to provide liquidity into.
Choose your token & click “Trade”.
Choose the token pair by clicking Trade against the token you wish to provide liquidity into.
Go to “Pool information”
Navigate to the pool information of the trading pair.
Click on “Add LP”
Choose “Zap In”
Select your deposit token
In this case we are choosing ADA
In most cases, when users are Zapping Into a LP, they most likely will be using ADA.
Define the amount of ADA to deposit
When you set the amount of ADA you wish to deposit, you will be shown the amount of liquidity LP tokens you will receive in exchange.
Click “Zap now” to continue
Sign the transaction and submit
Success, you have now performed a Zap In
Check your liquidity
You can check your liquidity at any time by navigating to Earn > Liquidity.
This screen will show you all of your liquidity positions on the DEX.
Zap In on Minswap is a user-friendly feature designed to streamline the process of providing liquidity to liquidity pools. Allowing users to deposit a single token and handling the necessary swaps behind the scenes makes liquidity provision faster, simpler, and more accessible, especially for new users.
