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  • Welcome
  • Basics
    • A Short Explainer
    • What is special about Hop?
    • How to bridge with Hop
    • How long does a transfer take?
    • Fees
    • Providing Liquidity & Rewards
    • Transfer failures
    • Manual Withdrawals
    • USDC.e Manual Withdrawals
    • FAQ
      • How to manually withdraw your tokens on the destination chain?
      • How to use Hop with a Gnosis Safe?
      • My funds are stuck on a Layer-2 network because I can't pay the gas needed for transactions
      • Can I access Hop Protocol through other interfaces than Hop.Exchange?
      • Why can I not access Hop.exchange?
      • Hop labels my transaction as completed but I can't "see" my tokens in Metamask
      • Do I need to pay transaction costs on the destination chain before I receive my tokens?
      • What are the fees for transfering tokens with Hop?
      • What is Hop Protocol?
      • How safe is Hop?
      • How long does a Hop transfer take?
      • I sent a token but it's not arriving at the destination
      • How do $OP on-boarding rewards work?
      • What do I need in order to provide liquidity on Hop?
      • Do I need to add Hop tokens and native tokens in equal weights?
      • How does a Hop token hold its peg with its native counterpart (e.g 1hUSDC = USDC)?
      • How do I get Hop tokens (hTokens)?
      • Can I buy hTokens on L2?
      • Why does my LP token balance show less than I deposited?
      • How does a rogue chain affect my LP position on another chain?
      • Who can become a Bonder?
      • What is a "Transfer bond"?
      • What is a "Transfer root"?
      • What does “The Bonder” do?
      • What happens if The Bonder bonds fraudulent transactions?
  • Governance
    • Into to Hop DAO
    • How to Vote
    • Becoming a Delegate
    • Liquidity mining
    • Token Distribution
    • Protocol Fees & Public Good Funding
    • Roadmap
    • Important Links
  • Stats
    • Links to Stats Dashboards
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  • How to Provide Liquidity (Step by Step)
  • Step 1: Choose your Pool
  • Step 2: Choose Amount
  • Step 3: Approve & Deposit
  1. Basics

Providing Liquidity & Rewards

Last updated 2 years ago

In this section, we describe how you can begin providing liquidity in Hop and earn liquidity mining rewards. As mentioned, Hop has AMM's on each chain it supports. These AMM's effectively create markets between the canonical wrapped assets of the native bridges (e.g $USDC on Optimism) and between the Hop bridge tokens with the shortened challenge times (e.g $hUSDC on Optimism). When an individual provides liquidity to a pool, the individual receives an LP token which represents their individual share of the pool. This share becomes more valuable over time as it accrues fees generated from transfers. For example, imagine you provide 1 ETH into the $ETH pool on Arbitrum and receive 0.98 HOP-ETH-LP tokens. 1 year later you withdraw your liquidity from the pool (by burning the 0.98 HOP-ETH-LP tokens) and you receive 1.1 $ETH back. This means you will have earned 10%.

How to Provide Liquidity (Step by Step)

First, you need to of course make sure you have assets on the network you want to provide liquidity on. As an example, if you want to provide liquidity in the $ETH pool on Arbitrum you will need to send $ETH to Arbitrum via Hop or alternatively through the (takes same time but Hop is often cheaper).

Step 1: Choose your Pool

Choose a pool based on the highest yield or the asset& network of your choice. Once you've decided you need to click on "Add liquidity" in the row of choice.

Step 2: Choose Amount

You will see for each pool there's always two input fields. One for the "canonical" asset (e.g $ETH) and one for the Hop bridge token (e.g $hETH). Enter the amount you want to deposit into the input field of each token. You can provide single-sided (i.e only one asset) in which case you leave the other input field empty or provide both tokens in the ratio you like.

Step 3: Approve & Deposit

To start depositing your token(s), click the "Preview" button. A modal will appear showing you an overview of your transaction one last time before you actually deposit. If everything looks good you can hit the "Deposit & Stake" button. If you don't wish to stake your LP tokens and earn $HOP liquidity mining rewards you can click the grey "Deposit" button just below. This will simply deposit your tokens but not stake the LP tokens.

Assuming you have chosen to "Deposit & Stake" a wizard will walk you through all the necessary transactions and steps to stake your LP tokens. This will involve Approvals, Deposits and Stake transactions so expect to sign several transactions in your wallet. The good thing is, this happens on Layer-2 so the transactions are cheap and fast.

Congrats you are now a liquidity provider in a Hop AMM and earning bridge fees + $HOP rewards 🥳

Clicking "Add liquidity" will lead you to the specific pool page of your choice. You'll see the 24hr volume, TVL as well as its APR. In some cases you will need to your $ETH (same for $MATIC) to turn it into an ERC-20 token before depositing it into the pool. You will see a little prompt "Click here to Wrap or Unwrap" to do so.

wrap
native Arbitrum bridge