With the release of Katana Dex, Axie Infinity’s decentralized exchange, so does the announcement and release of Ron Token, the ecosystem token of Ronin, the sidechain of Axie Infinity.
In a statement, the Axie Infinity team said it launched RON at the same time as Katana because it wants to distribute this token to the members of the community who will begin adding liquidity to Katana. This means that everytime you provide liquidity to ensure Katana Dex continues to operate, you have the opportunity to obtain RON in proportion to your contribution in the pool.
RON TOKEN 101, What is RON?
Table of Contents.
- 1 RON TOKEN 101, What is RON?
- 2 What is a Liquidity Pool?
- 3 How to Provide Liquidity?
- 4 What Trading Pairs are available to add Liquidity?
- 5 What are LP Tokens?
- 6 Wait, I get Ron Token for Adding Liquidity?
- 7 Is Adding Liquidity in Katana Dex profitable?
- 8 What is Impermanent Loss?
- 9 What are the rewards for adding liquidity?
- 10 How to Add Liquidity Pair in Katana
- 11 How to check the trading fees earned?
- 12 How to remove liquidity from Katana?
- 13 How to Farm Ronin Tokens in Axie Infinity’s Katana Dex?
- 14 How to Stop Farming Ron Tokens
- 15 Should I add Liquidity to AXS/ETH or SLP/ETH?
RON is the ecosystem token of the Ronin Chain. It will be used as a fee for all transactions happening in Axie Infinity and also in all other games that will be in the RONIN sidechain. RON is therefore needed to ensure the Ronin blockchain is continually owned by the community.
No RON Is for sale.
At the moment, rewards in the form of RON tokens are given to users who provide liquidity to Katana. This article will explain that in detail, but before everything else, we must understand what Liquidity Pool is first.
What is a Liquidity Pool?
When someone says an exchange is “liquid,” it means its users are able to convert their token to another token with ease. For example, if the current ETH price is $4,500, and I want to sell my 1 ETH at $4,502, a liquid exchange ensures that there should always be someone willing to match my price. Most often than not, this is made possible by the so-called market makers, who are professional traders or entities.
In a decentralized exchange, the job to ensure trades are matched rests with the community itself. The community will “add liquidity” to a pool to make sure everyone gets better prices when swapping. In return for their service, they receive fees and in addition, rewards.
When you provide liquidity in Katana right now, you get fees plus RON as rewards. More on this later.
How to Provide Liquidity?
You must provide two assets that are of equal value into the pool. For example, if the 1 ETH is $4,000 and 1 AXS is $100, if you want to provide 1 ETH to the pool, you also need to provide 40 AXS.
What Trading Pairs are available to add Liquidity?
- RON/ETH (soon)
What are LP Tokens?
This is the token that gets generated as a way to represent the value of the two tokens you provided into the pool.
Wait, I get Ron Token for Adding Liquidity?
10% of the total RON Supply will be given to liquidity providers as rewards.
Is Adding Liquidity in Katana Dex profitable?
There’s what we call Impermanent Loss.
What is Impermanent Loss?
When you added 1 ETH and 40 AXS earlier for $4,000 of equal value from both of these tokens, you’ll get this “impermanent loss” once the value of the tokens against each other changes.
Let’s give a better example: You deposit 1 ETH and 100 USDC (assuming 1 ETH = 100 USDC for simplicity’s sake). This means you have $200 provided into the liquidity pool (1 ETH is $100 and 100 USDC is $100)
What if the value of ETH becomes $150? We’ll skip the technicalities, but you, the liquidity provider, decided to withdraw your funds from the pool, you’ll receive .5 ETH and 150 USDC totalling $200.
What if you decide not to add funds to the liquidity pool? What if you simply HODL’D? Yes, you’ll have
1 ETH = worth $150 and 100 USDC still worth $100, so you have $250.
So it’s clear that if you simply hodl’d, you’ll have more in dollar terms. So why provide liquidity then?
What are the rewards for adding liquidity?
As a liquidity provider, you’ll earn trading fees (instead of the market makers earning this in centralized exchanges)
In the case of Katana Dex, liquidity providers will also be given RON token as reward.
At the time this article is written, RON token has no value. There are estimates floating around on Twitter, but simply put, we’ll know more once RON is actually released.
How to Add Liquidity Pair in Katana
1) To start, go to https://katana.roninchain.com/#/pool. You will arrive at this page:
2) Click “Add Liquidity.”
3) The next page will ask you to provide tokens of equivalent value.
You actually only need to fill in the value for one token and Katana will auto-populate the value for the 2nd token.
4) Click Supply. The next page will show you the amount of LP tokens you will receive.
5) Click “Confirm Supply” then “Confirm” on the pop-up that will appear.
You have now added funds to the Katana Liquidity Pool!
How to check the trading fees earned?
1) Go to Analytics at https://katana-analytics.roninchain.com/home.
2) Click Accounts. You will arrive at this page:
3) Input your Ronin address in this page. You will see the following:
(Sorry if we have to edit the screenshot, but here’s what you’ll see:)
- Your Liquidity (Including Fees)
- Liquidity Position
- The transactions you did
- Wallet Stats including total fees earned.
How to remove liquidity from Katana?
Just click Remove on the Analytics page (see above picture) or in the Pool page.
How to Farm Ronin Tokens in Axie Infinity’s Katana Dex?
In order to earn Ron tokens, you must “stake” the LP tokens you receive when you provide liquidity to Katana.
1) Go to Katana Farm Page here: https://katana.roninchain.com/#/farm. You will arrive at this page:
2) Click the down arrow. If you already have LP tokens, there’s a button to “approve.”
3) Click “stake” after you approve.
4) A confirmation step will appear.
Once the staking of the LP tokens is complete, you will begin earning free RON tokens!
Note that the “claimable rewards” section above says “WRON” or “Wrapped RON.” You will be able to convert it to RON at some point in the future.
How to Stop Farming Ron Tokens
On the Katana “Farm Page” just click “Unstake” (see picture above).
Should I add Liquidity to AXS/ETH or SLP/ETH?
I have added liquidity to AXS/ETH but according to others, you will earn more fees and of course more RON tokens on the SLP/ETH pair simply because there are more SLP in circulation, and more users wanting to exchange their SLP into ETH.
This article is published on BitPinas: Ron Token Axie Infinity Guide | How to Farm and Earn Ron with SLP, AXS, WETH, Stake, Add Liquidity Pool on Ronin