In the last tutorial about DEXs and AMMs, we described a DEX as a giant global vending machine for tokens. Instead of a shopkeeper or a bank clerk, this vending machine is stocked and maintained by everyday people like you; the liquidity providers (LPs).
As a liquidity provider, you earn a share of trading fees every time someone swaps tokens in your pool.
When you provide liquidity, it’s like you’re stocking the vending machine with your favorite snacks (tokens). Every time someone buys a snack (swaps tokens), you earn a small fee as a thank-you for making the machine work smoothly. Now let’s overview how you can start providing liquidity with the tokens you have on V2 and V3 AMMS.

​
How Providing Liquidity Works

You’ll need two tokens to provide liquidity
Providing liquidity exposes you to impermanent loss. Your tokens’ values can change relative to each other while locked in the pool.
When you add these tokens to a liquidity pool (like on Aftermath or Momentum), you’re basically “depositing” them so other people can swap between them anytime. The amount of each token depends on the AMM type. Some allow you to specify the amount the ratio of tokens you want to provide and others would specify.
Start with stablecoin pairs (like USDC/USDT) to minimize impermanent loss risk while learning.
For example, if you want to provide liquidity to a SUI/USDC pool and SUI is worth 1,youmightdeposit1, you might deposit 500 worth of SUI and $500 worth of USDC in a 50/50 pool.

​
Providing Liquidity on V2 AMMs

On V2 AMMs, all you need to do is add the tokens to the pool and start earning. In this case, we will use Aftermath: an advanced V2 AMM on the Sui blockchain.
V2 AMMs are simpler but less capital efficient than V3. Your liquidity is spread across all price ranges.

​
Visit the AMM

First visit the AMM website. In this case, visit https://aftermath.finance/ and login or connect your wallet. Screenshot 2025-07-13 at 12.18.59.png

​
Visit the Pools Page

After connecting your wallet, Toggle the earn tab and head to the Pools page where you will be adding liquidity. Screenshot 2025-07-13 at 12.23.08.png

​
Select a Pool

On the Pools page, you’ll find a lot of pools. You can even create your own pools. Now select the pool you want to add liquidity. Screenshot 2025-07-13 at 12.26.02.png

​
Add Liquidity to the Pool

Confirm that the APR and TVL are satisfactory. Then, enter the tokens you’re adding to the pool, configure slippage as you deem fit, and confirm the transaction. Screenshot 2025-07-13 at 13.05.04.png

​
Review & Confirm the Transaction

Review the transaction details, and, if you’re satisfied with the output, proceed. Screenshot 2025-07-13 at 13.07.16.png

​
You can Always Withdraw

After depositing into the pool, you can always withdraw your money whenever you want. Screenshot 2025-07-13 at 13.07.53.png

​
Providing Liquidity on V3 AMMs

The primary difference between providing liquidity on V3 compared to V2 is that you specify a price range for your liquidity.

​
Visit the V3 AMM

First Visit the V3 AMM. In this case, we will be using Momentum’s V3 AMM at mmt.finance to provide liquidity. Viit the website and connect your wallet. Screenshot 2025-07-13 at 14.00.21.png

​
Visit the Liquidity Page

After connecting your wallet, visit the liquidity page to browse through liquidity pools. Screenshot 2025-07-13 at 14.01.16.png

​
Search or Select a Pool

Search or select a liquidity pool you want to add liquidity to. In this case, I’ll add liquidity to the SUI-USDC pool. Screenshot 2025-07-13 at 14.02.50.png

​
Specify the Price Range for your Trade

On the left, you can specify the price range. You want to select an optimal price range with a decent APR as well. Screenshot 2025-07-13 at 14.05.28.png

​
Set Deposit Amount & Add Liquidity

Set the deposit amount for the tokens and set the slippage to a percentage that you’re comfortable with. Finally, add the liquidity. Screenshot 2025-07-13 at 14.17.29.png

​
Pay Attention to your Positions

You’ll need to pay attention to your positions so you keep earning when they go out of range. Check out Momentum’s “My Position” page to track your position and claim pending yield. Screenshot 2025-07-13 at 14.38.31.png Congratulations! Now you know how to add liquidity and earn passive income on your money. Adding liquidity comes with risks that you need to be aware of. Learn about impermanent loss so you stay safe while providing liquidity.