Provide liquidity

How a position earns#

Your liquidity sits in a price range you choose. While the pool's price is inside it, your liquidity trades and earns its share of every swap's LP fee, in the token the swapper paid with. When the price leaves the range, the position stops trading and holds only one token: the base token below the range, the quote token above it.

A narrow range earns more per unit of capital while the price stays inside it, and stops earning sooner when the price moves. A wide range earns less per unit, for longer.

Positions are NFTs#

Each position is an ERC-721 token minted by Uniswap's PositionManager. The NFT holds the pool, the range and the liquidity, and whoever holds it can collect its fees and remove its liquidity. Transfer the NFT and you transfer the position.

Add liquidity#

1. Open a pool

   Go to Pools. Each row shows the pair, the hook and the fee. Open a pool: its page shows the liquidity by price, the current price, the hook's settings and, for a pool on a Socket hook, the buyback share it keeps.

2. Pick a range

   Choose a preset around the current price, type a min and max price, or drag the range's edges on the liquidity chart. The edges snap to the pool's tick spacing.

3. Enter an amount

   Type an amount of either token. The app works out the liquidity that amount buys and how much of the other token the range needs at the current price.

4. Deposit

   Press Add liquidity. The first time you deposit an ERC-20 token, approve Permit2 for it. Then sign the permit and confirm. One transaction mints your position NFT and deposits into it.

If your range sits entirely above or below the current price, it takes only one token: the app says which and disables the other field. That is a valid position, and it starts earning once the price moves into it.

Hooks that see your liquidity#

Socket's built-in hooks are called after you add or remove liquidity, through afterAddLiquidity and afterRemoveLiquidity. They use those calls only to take the buyback share of the fees your position collects. They don't restrict deposits or withdrawals.

A listed external hook can be called at other points. The pool page shows which calls its hook gets. See Hooks.

Your positions#

Positions lists every position NFT the connected wallet holds, on every pool. Each card shows:

• The range against the current price, and whether it is In range, Out of range or Empty.
• What the liquidity is worth now, in both tokens.
• Fees earned and not yet collected, after the buyback share in pools on Socket's hooks.

Collect fees#

Collect fees sends the fees a position has earned to your wallet without touching its liquidity. In Uniswap v4, any change of a position collects its fees, and a collection is a change of zero liquidity.

Add to a position#

Add deposits more liquidity in the same range. The same transaction collects the position's fees.

Remove liquidity#

Choose how much to remove and press Remove. The removal collects all the position's fees in the same transaction, so you get the share of liquidity and every fee owed. The transaction carries a minimum of each token, set from your slippage setting.

Fees in detail#

The fee a swap pays is the pool's LP fee: fixed in the pool key, or for a Dynamic fee pool whatever the hook sets for that swap, never above the pool's max fee. Uniswap v4 counts fees in hundredths of a basis point, so 3,000 is 0.30%. The fee goes to the liquidity in range at the moment of the swap, in proportion to each position's liquidity.

In pools on Socket's built-in hooks, the hook keeps a buyback share of the fees a position collects and sends it to the Buyback contract, which buys SOCKET and burns it. The share is 20% today. Each pool keeps the share it was initialized with, and its page shows it. The rest goes to you. Pools with no hook, or on an external hook, keep no buyback share. See The SOCKET token.