A Beginner's Guide to Ekubo
How to Trade, Provide Liquidity, and Earn Rewards on Ekubo
Ekubo Protocol is a new type of Automated Market Maker (AMM) designed for Starknet, a Layer 2 solution on Ethereum. It offers features like concentrated liquidity, which lets you provide liquidity in specific price ranges, and very efficient, low-cost transactions.
Knowing how to use Ekubo is important if you want to learn the A - Z you need even if you are just coming across the protocol for the first time
Getting Started
To begin using Ekubo Protocol, you'll need to set up a compatible wallet, fund it with Ethereum, and connect it to the Ekubo platform. Here is how to go about it:
Setting Up Your Wallet
Ekubo Protocol operates on Starknet, which requires specific wallets that are compatible with this Layer 2 solution. Two recommended wallets for this purpose are Argent X and Braavos.
Argent X: Argent X is a popular Starknet wallet designed to provide a secure and user-friendly experience.
Braavos: Braavos offers another option for Starknet users, focusing on ease of use and robust security features.
How to Install and Set Up These Wallets
Installing Argent X
Go to the Argent X website.
Click on the download button for your browser (available for Chrome and Firefox).
Follow the prompts to add the Argent X extension to your browser.
Once installed, click on the Argent X icon in your browser’s toolbar.
Follow the setup instructions to create a new wallet or import an existing one.
Installing Braavos:
Visit the Braavos website.
Download the browser extension for Chrome or Firefox.
Add the extension to your browser following the provided instructions.
Click on the Braavos icon in your browser’s toolbar.
Complete the setup process to create a new wallet or restore an existing one.
Funding Your Wallet with Ethereum
Obtain Ethereum: Purchase Ethereum from a cryptocurrency exchange like Coinbase, Binance, or Kraken.
Ensure you have enough ETH to cover transaction fees and any initial liquidity provision or trading.
Transfer Ethereum to Your Wallet:
Copy your wallet address from Argent X or Braavos.
Go to your cryptocurrency exchange and initiate a withdrawal.
Paste your wallet address and specify the amount of ETH to transfer.
Confirm the transaction and wait for it to be processed (this may take a few minutes).
Connecting to Ekubo
Visit the Ekubo Website: Open your web browser and go to the Ekubo Protocol website.
Familiarize yourself with the interface and available features.
Initiate Wallet Connection: On the Ekubo website, locate and click on the “Connect Wallet” button, typically found at the top right corner of the page.
Select Your Wallet: A prompt will appear asking you to choose your wallet. Select Argent X or Braavos from the list of compatible wallets.
Authorize the Connection: Your wallet extension will open a pop-up window requesting permission to connect to Ekubo. Review the permissions and click “Connect” or “Authorize” to allow the connection.
Verify Connection: Once connected, you should see your wallet address or balance displayed on the Ekubo platform.
You are now ready to start using Ekubo for providing liquidity, trading, and exploring other features.
Providing Liquidity on Ekubo
What It Means to Provide Liquidity
Providing liquidity involves depositing your tokens into a liquidity pool on the Ekubo Protocol. These pools facilitate trading by allowing users to swap one token for another. As a liquidity provider, you contribute to the pool's available assets, enabling efficient trading while earning a share of the trading fees.
Benefits of Being a Liquidity Provider on Ekubo
Earning Fees: Every time a trade occurs in the pool, a small fee is charged. As a liquidity provider, you earn a portion of these fees based on the amount of liquidity you’ve provided relative to the total pool.
Incentives: Ekubo may offer additional incentives like STRK rewards to liquidity providers, enhancing your potential earnings.
Capital Efficiency: Ekubo’s concentrated liquidity feature allows you to provide liquidity within a specific price range, making your capital more efficient by focusing on the most likely trading ranges.
Market Making: You help maintain the market's liquidity by providing liquidity, contributing to smoother and more stable trading conditions.
Choosing the Right Pool for Liquidity Provision
Assessing Popular Pairs:
Look for pools with high trading volume and liquidity, as these are likely to generate more fees. Common pairs might include major cryptocurrencies like ETH/USDC, ETH/DAI, or BTC/USDT.
Understanding Pool Metrics and How to Interpret Them
Total Value Locked (TVL):
This represents the total amount of assets held in the pool. Higher TVL often indicates a more stable and active pool.
Volume:
The trading volume shows how frequently trades occur in the pool. Higher volume can lead to more fee earnings.
Fees:
Check the fee structure for the pool. Some pools may have higher fees, which could mean higher earnings for liquidity providers.
Price Range:
For concentrated liquidity, understand the typical price range for the pool’s assets. This helps in setting your liquidity position effectively.
Step-by-Step Process of Adding Liquidity
Navigate to the Ekubo Interface:
On the Ekubo platform, go to the “Pools” or “Provide Liquidity” section.
Select the Desired Pool: Choose the pool you want to provide liquidity to from the list. Ensure it matches your assets and investment strategy.
Deposit Tokens: Specify the amount of each token you want to add to the pool. For example, if you are adding to an ETH/USDC pool, enter the amount of ETH and USDC.
Setting Your Price Range for Concentrated Liquidity
Define the Price Range:
Ekubo allows you to set a specific price range for your liquidity provision. This means your assets will only be used for trades within this range. You can use historical price data and market analysis to determine a realistic and profitable range.
Adjust the Range:
Use the interface to set the minimum and maximum prices for your range. This determines where your liquidity will be active. Consider starting with a broader range if you’re new to concentrated liquidity and narrowing it as you become more comfortable.
Confirming the Transaction and Tracking Your Position
Review the Details: Before finalizing, review the details of your liquidity provision, including the amounts, price range, and potential fees.
Confirm the Transaction: Click “Add Liquidity” or the equivalent button. Your wallet will prompt you to approve the transaction. Confirm it to proceed.
Track Your Position: After adding liquidity, you can monitor your position through the Ekubo interface. This includes tracking your earnings, the value of your provided liquidity, and the performance of the pool.
Regularly check your position to make adjustments as needed, especially if the market moves significantly outside your set price range.
Trading on Ekubo
What Are Token Swaps and How They Work on Ekubo
Token swaps mean exchanging one cryptocurrency for another. On Ekubo, swaps happen in liquidity pools. When you swap tokens, you trade your tokens for others from a pool provided by liquidity providers.
Benefits of Trading on Ekubo
Low Fees: Ekubo’s design and Starknet’s low fees mean you pay less to trade.
Better Prices: Liquidity providers set specific price ranges, leading to better prices for swaps.
Decentralized: You trade directly from your wallet without using a centralized exchange, making it more secure.
Flexible: Trade many different token pairs and enjoy advanced features on Ekubo.
Step-by-Step Process of Swapping Tokens
Go to the Swap Interface: Open the Ekubo platform and find the “Swap” section.
Select Tokens to Swap: Choose the token you want to trade (e.g., ETH) and the token you want to get (e.g., USDC).
Enter Swap Amount: Type in how much of the token you want to trade.
Review Swap Details: Check the details like the exchange rate, fees, and the amount you’ll receive.
Execute the Swap: Click “Swap” to start the trade. Your wallet will ask you to confirm the swap. Approve it.
Transaction Confirmation: After you approve, the swap will process. This may take a few moments.
Review Receipt: Once done, you’ll get a receipt confirming the swap details.
View Swap History: On Ekubo, go to your account or transactions section to see your past swaps.
Check Details: Review details like amounts, dates, and fees for each trade.
How to View and Manage Your Active Positions
Access Your Positions: Go to the “My Positions” section on Ekubo.
View Details: See all your active positions, including the token pairs, amounts, and price ranges.
Performance Metrics: Check your earnings, the current value of your liquidity, and past performance.
Understanding Your Position’s Performance Metrics
Fees Earned: See how much you’ve earned from trades in the pool.
Value of Liquidity: Check the current market value of your provided tokens.
Historical Performance: Look at how your positions have performed over time.
When and Why to Adjust Your Liquidity Range
Market Changes: Adjust your range if the token prices move out of your current range.
Maximize Earnings: Shift your range to where trading activity is highest to earn more fees.
Risk Management: Move your range to protect your liquidity from big market drops.
Step-by-Step Process of Updating or Removing Liquidity
Go to the “My Positions” section on Ekubo.
Choose the position you want to update or remove.
Set a new price range using the interface.
Review the new settings and confirm. Your wallet will ask for approval.
To withdraw liquidity, choose the remove option. Specify how much to withdraw and confirm.
Leveraging Advanced Features on Ekubo
Using Extensions
Extensions on Ekubo add new features to the platform, making it more powerful. These can include tools like oracles for real-time data or different order types like limit orders. Using these extensions can help you customize your trading and liquidity strategies.
How to Integrate and Use These Extensions
Visit the Ekubo platform’s extensions marketplace or documentation to see what extensions are available. Read about each extension’s features and how it can help you.
Pick an extension that fits your needs, like an oracle for price data or a limit order tool for specific trade conditions.
Follow the steps to add the extension. This might involve linking it to your wallet or Ekubo account. Some extensions may need extra setup, like configuring settings or connecting to external data.
Start using the extension’s features. For example, set limit orders to trade at specific prices or use oracles for up-to-date price info.
Monitor how the extension performs and adjust settings as needed.
Flash Accounting and Free Flash Loans
Flash accounting lets you trade and manage positions more efficiently by handling token balances within Ekubo before finalizing transfers. This means you can make multiple trades or adjustments in one transaction, saving on gas fees.
Steps to Use Flash Accounting:
Plan Your Actions: Decide on the trades or liquidity changes you want to make, like swapping tokens or updating liquidity positions.
Execute Multiple Actions: On Ekubo, perform all your desired actions in one go. This could include trading tokens, adding liquidity, or adjusting positions. Ekubo handles the internal accounting and finalizes the token transfers at the end of the transaction.
Confirm the Transaction: Review all actions and confirm the transaction in your wallet. This single confirmation covers all internal actions, reducing gas fees.
Steps to Take Advantage of Free Flash Loans
Free flash loans let you borrow tokens from Ekubo’s pools within a single transaction, as long as you return them by the end of the transaction. This is useful for strategies like arbitrage. Here are the steps to Use Free Flash Loans:
Find an Opportunity: Look for opportunities like price differences between pools or platforms where you can profit by borrowing tokens temporarily.
Borrow Tokens: Use Ekubo’s flash loan feature to borrow the tokens you need. Since the loan must be repaid in the same transaction, plan your actions carefully.
Execute Trades: Perform trades or liquidity changes to capitalize on the opportunity, like buying low on one platform and selling high on another.
Repay the Loan: Ensure all borrowed tokens are returned by the end of the transaction. Ekubo handles this automatically.
Confirm the Transaction: Review and confirm the transaction in your wallet. The flash loan and all related actions will be completed in a single transaction, ensuring efficiency and cost savings.
Maximizing Rewards and Incentives On Ekubo
STRK Rewards and How They Work
STRK rewards are bonuses given to users who provide liquidity on the Ekubo platform. These rewards come from the Starknet DeFi Spring initiative by the Starknet Foundation. The amount of rewards you get depends on how deep your liquidity is and the price changes (volatility) of the trading pairs.
How Are STRK Rewards Distributed?
Rewards are given based on the amount of liquidity you provide for different trading pairs.
The deeper your liquidity (more tokens available for trading at different prices), the higher your rewards. Realized volatility (how much the price of a pair changes over time) also affects how rewards are distributed.
Importance of Market Depth and Realized Volatility
Market Depth: Market depth is the amount of liquidity available at various price levels. More depth means more tokens are available for trading without causing big price changes.Higher market depth in your pool leads to more STRK rewards.
Realized Volatility: Realized volatility measures how much the price of a token pair changes over time. Pairs with higher volatility usually have more trading, which can lead to more fees and higher rewards.
Strategies to Maximize Rewards
Stay Close to the Market Price: Place your liquidity within a price range close to the current market price. This way, your liquidity gets used more often for trades, earning you more fees and rewards. Regularly check the market price and adjust your positions to stay within an active trading range.
Use Concentrated Liquidity: Instead of spreading your liquidity across a wide price range, focus it on a narrower range where most trades happen. This increases the chances of your liquidity being used, boosting your earnings.
How to Earn More Incentives with Larger and Strategic Positions
Increase Your Position Size: Larger liquidity positions earn more STRK rewards. By providing more tokens, you contribute to the pool’s depth, making it more attractive for traders and earning you higher rewards. Manage risk carefully and avoid putting too many tokens in one pool or price range.
Choose the Right Pools: Pick pools with high trading volumes and moderate volatility. These pools often offer better rewards because they have more trades and balanced risk.
Spread your tokens across multiple pools to reduce risk and earn rewards from different trading activities.
Adjust for Volatility: Use pools with higher realized volatility to potentially earn more rewards. Volatile pairs usually have more trading activity, leading to higher fees and more STRK rewards. Keep an eye on the 14-day realized volatility of pairs and adjust your liquidity positions accordingly.
Monitor and Adapt: Regularly check how your liquidity positions are performing. Track metrics like fees earned, position value, and market trends.
Be ready to adjust your positions based on market changes, ensuring you always have liquidity in active trading ranges.
Conclusion
Finally, join the Ekubo community to stay updated on new features and developments. Follow Ekubo on social media, and keep up with our latest news to make the most of your experience with Ekubo.
Website: https://ekubo.org/
Twitter: https://x.com/EkuboProtocol