Liquidity

💧 Providing Liquidity

Adding liquidity through a smart contract on Zealous Swap requires careful consideration of token ratios to avoid unnecessary loss due to arbitrage. This guide explains how to safely add liquidity using the router.

📘 Understanding Price Ratios

When liquidity is added at a price that doesn't match the current pool ratio, the difference is exploitable by arbitrageurs.

Example: If the KAS/USDT pool has a ratio of 10 KAS : 20 USDT (i.e. price is 1 KAS = 2 USDT), and you provide liquidity at 10 KAS : 30 USDT, you're effectively implying a different price (1 KAS = 3 USDT). The pool will accept your deposit, issue you fewer LP tokens (fair value at the true pool price), and the imbalance you introduced creates an opportunity for someone else to profit — at your expense.

To prevent this, always add liquidity based on the current market price, not arbitrary values.

🛠️ Using the Router

The Zealous Swap Router includes helper functions to simplify safe liquidity provisioning:

  • addLiquidity — for token/token pairs (e.g. USDT/KAS) (KAS is treated as WKAS)

  • addLiquidityKAS — for KAS/token pairs (KAS is treated as native)

Both methods require:

  • A desired amount of each token (your target contribution)

  • A minimum amount for each token (your slippage tolerance)

  • Approval of tokens to the router

  • Sufficient token/KAS balance in your contract

🧪 Example: Add Liquidity to a USDT/KAS Pool

Let’s say the KAS/USDT pool ratio is 1 KAS = 2 USDT, and you want to add liquidity accordingly.

uint amountKASDesired = 1 ether;
uint amountUSDTDesired = 2 * 10 ** USDT.decimals();

// Set slippage tolerance (e.g., 1%)
uint amountKASMin = amountKASDesired * 99 / 100;
uint amountUSDTMin = amountUSDTDesired * 99 / 100;

// Transfer USDT to your contract
require(USDT.transferFrom(msg.sender, address(this), amountUSDTDesired), "USDT transfer failed");

// Approve the router to spend USDT
require(USDT.approve(address(ZealousSwapRouter), amountUSDTDesired), "Approval failed");

// Add liquidity (KAS sent as msg.value)
ZealousSwapRouter.addLiquidityKAS{ value: amountKASDesired }(
    address(USDT),
    amountUSDTDesired,
    amountUSDTMin,
    amountKASMin,
    msg.sender,
    block.timestamp
);

📌 Notes

  • amountKASDesired and amountUSDTDesired reflect your price belief. You must calculate these off-chain before submitting the transaction.

  • amountKASMin and amountUSDTMin are protection thresholds. If the pool's price shifts beyond your tolerance, the transaction reverts.

  • Don't fetch pool prices on-chain during the same transaction — the reserves can be manipulated within a block.

✅ Best Practices

  • Use a trusted external price feed to determine token ratios before submitting.

  • Always pre-approve the exact token amount you intend to deposit.

  • Avoid extremely tight slippage unless you're certain the transaction will confirm quickly.

  • Monitor liquidity pool reserves and price volatility when deploying automated contracts.

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