Since version 4.1, TokenGen allows payments for projects in ETH via the Uniswap protocol. This means that, in the end, Fabric Tokens are again used for the payment since the ETH paid by the client goes through the FT liquidity pool on Uniswap where it is exchanged for Fabric Tokens. Here’s how you can join this liquidity pool and collect fees on trades from it.
Joining the Fabric Token Uniswap Liquidity Pool
Before we get to the part where we explain how you join the FT pool, we first need to clarify a few things about how Uniswap works.
How Uniswap Works
First of all, the pool works in a very simple manner i.e. it has a supply of ETH and a supply of FT. The ratio between the two determines the exchange rate.
Now, anyone who wants to join the pool needs to supply both ETH and FT in order to keep the exchange rate the same. For example, if the current exchange rate when you are joining is 1 ETH equals 10,000 FT, and you want to join with 10 ETH, then you need to supply 10 ETH and 100,000 FT. Simple as that.
Secondly, the exchange rate varies as people purchase ETH/FT from the pool. For instance, when someone buys a project on TokenGen, they will insert ETH into the pool and take FT out of it. This will switch the ratio more in favor of FT, making it more expensive when traded for ETH since its supply has decreased and the ETH supply has increased.
Lastly, there is a 0.3% fee on trades from the pool, which pool participants collect whenever they withdraw funds from. As noted by Uniswap:
A small liquidity provider fee (0.3%) is taken out of each trade and added to the reserves. While the ETH-ERC20 reserve ratio is constantly shifting, fees makes sure that the total combined reserve size increases with every trade. This functions as a payout to liquidity providers that is collected when they burn their pool tokens to withdraw their portion of total reserves. Guaranteed arbitrage opportunities from price fluctuations should push a steady flow of transactions through the system and increase the amount of fee revenue generated.
The stake in the pool’s fee is determined by your stake in the pool itself i.e. the more of the overall ETH and FT you own, the more you will get from the fees collected by the pool. And that’s pretty much how Uniswap works.
Joining the FT Pool
Of course, make sure you have some ETH and FT loaded in your MetaMask wallet. Once you have that covered, click on the Select a token button and then search for FT by entering its smart contract address i.e. 0x78a73B6CBc5D183CE56e786f6e905CaDEC63547B.
Once you see it, select it, and the current exchange rate will be displayed. This will help you determine how much ETH and FT you want to join with. In your case, there will also be an Unlock button next to the Select a token button.
This button is used to allow Uniswap to trade FT on your behalf. This is a pretty standard functionality of ERC20 tokens when dealing with exchanges.
Once you approve Uniswap to spend FT on your behalf, just enter the amount of ETH you want to join with and the amount of FT you have to provide will be automatically filled in based on the current exchange rate.
Finally, click the Add Liquidity button and submit the MetaMask transaction. Once it is confirmed, you will be able to see your stake in the pool. And that’s pretty much all there is to it.
We are currently looking into ways of listing FT by its label on the exchange so people won’t have to search for the smart contract address every time they want to find the pool.
Uniswap have a policy of listing tokens by their labels only if they are in the top 250 on CMC. While FT is not in the top 250 yet, we are looking into other ways to list FT by its label and make it easier for our community to find the liquidity pool.
Once that happens, we will update this guide accordingly. Until then, feel free to join the FT Uniswap liquidity pool at any time using the token’s contract address.