⚠️Before you use Taraswap

Important concepts to understand before using Taraswap

Things to Consider Before Using the Taraswap and Providing Liquidity

General Considerations for Liquidity Provision

1. Impermanent Loss:

   • When the price of tokens in your pool changes significantly, you may earn less compared to holding the tokens outright.

   • Always assess the volatility of the token pair before providing liquidity.

2. Price Range Management:

   • Taraswap(Uniswap v3) requires you to set a price range for your liquidity.

   • Narrow ranges can earn higher fees but increase the risk of going out-of-range.

   • Wide ranges are safer but earn fewer fees.

3. Out-of-Range Liquidity:

   • If the market price moves outside your set range, your liquidity stops earning fees.

   • Monitor your range regularly to ensure it aligns with market conditions.

4. Gas Fees:

   • Adding liquidity, claiming fees, and withdrawing positions involve gas costs.

   • This is not a problem, ha, we are on Taraxa. ☺️

5. Token Balance Risks:

   • When the price moves within your range, your token balance will adjust.

   • Example: If TARA rises in price, you might end up with more USDC and less TARA.

6. Reward Calculation:

   • Your fees are proportional to the amount of liquidity you provide and the time it stays in range.

   • Fees don’t automatically go to your wallet; you must claim them manually.

7. Market Volatility:

   • High-volatility pairs may generate more fees but also carry higher risks of impermanent loss.

   • Stablecoin pairs are generally lower-risk but earn fewer fees.

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Considerations for the Taraswap Incentives Module

1. Campaign Eligibility:

   • Rewards are tied to specific pools, fee tiers, and price ranges.

   • Ensure your liquidity position meets the campaign’s criteria to earn rewards.

2. Stake Your NFT:

   • After adding liquidity, stake your position NFT in the Taraswap Incentives module to start earning rewards.

   • Failing to stake means you won’t receive the additional rewards.

3. Reward Token Volatility:

   • Rewards are often paid in tokens from the project running the campaign.

   • Be aware that these tokens can fluctuate in value, impacting your overall ROI.

4. Duration of Campaigns:

   • Rewards are distributed over a fixed period.

   • You’ll only earn rewards while your liquidity remains in range and the campaign is active.

5. Withdrawal Flexibility:

   • Staking your NFT doesn’t lock your liquidity. You can withdraw it at any time.

   • However, withdrawing before the campaign ends may reduce your total rewards.

6. Gas Costs for Staking:

   • Staking and claiming rewards involve gas fees. Make sure to have some TARA for fees.

7. Double-Check Campaign Details:

   • Review all details of the staking campaign, including the reward token, duration, and eligibility criteria, before committing liquidity.

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Best Practices

• Start Small:

  • If you're new, start with a small position to understand the mechanics before scaling up.

• Monitor Regularly:

  • Use analytics tools to monitor your position’s performance and adjust ranges as needed.

• Diversify:

  • Avoid putting all your funds into a single pool. Diversify across pools to spread risk.

• Use Low-Gas Periods:

  • Perform transactions when network gas prices are lower to reduce costs.

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By carefully considering these factors, you can make informed decisions about providing liquidity and interacting with the Taraswap Incentives module, maximizing your rewards while managing risk.