Adding & Removing Liquidity to the Cardano Index

The newly launched Cardano Index on Blueshift gives you access to a diversified basket of tokens in the Cardano ecosystem.

Providing liquidity in an index fund has many benefits over single token pairs, such as:

• Diversification: An index fund offers exposure to a wide range of assets, which helps to spread risk and reduce the impact of market volatility on your portfolio.
• Lower Fees: Index funds usually have lower fees compared to actively managed funds or trading single tokens. Since index funds are passively managed, they require less expertise and research, resulting in lower management fees.
• Convenience: Accessing and managing an index fund is easy, as you don’t need to track individual tokens or conduct extensive research on each asset. With an index fund, you can access a diversified portfolio with a single purchase.
• Time-Saving: Unlike single tokens, index funds do not require constant monitoring. By accessing an index fund, you can save time and reduce stress while still benefiting from exposure to a diversified portfolio.

The Cardano Index on Blueshift comprises four key projects building on Cardano with cross-chain aspirations, including Blueshift, Cornucopias, NMKR, and VyFinance.

By providing liquidity to the Index, you gain a portion and exposure to these assets. Don’t miss out on this opportunity to diversify your portfolio and support the future of Cardano!

How to Provide Liquidity to the Cardano Index

Providing liquidity to the DEX is easy. There are a few additional steps as the DEX is built on the Milkomeda side chain and does require additional steps in that you are required to bridge assets from the Cardano mainnet to Milkomeda C1.

Here are the steps to follow:

1. Visit the Blueshift DEX and navigate to the Bridge
   https://app.blueshift.fi/#/bridge
2. Connect your Cardano wallet and your EVM based wallet, e.g Metamask
3. Select the token that you would like to bridge over to Milkomeda, e.g ADA
4. Click Bridge; this will start the bridging process

This process of bridging the assets over can take up to 15 minutes. Be sure to check your transaction on the various blockchain explorers.

The next step is to interact with the portfolio on the DEX once your assets have been bridged.

1. Connect your wallet to the Blueshift DEX platform.
2. Navigate to the Cardano Index Portfolio page and select the “Add Liquidity” option.
3. Choose the amount of liquidity you want to provide and the tokens you want to use. For example, you could provide liquidity using ADA and BLUES (Blueshift’s native token).
4. Confirm the transaction and approve the spending of your tokens.
5. Once the transaction is complete, you will receive liquidity pool tokens representing your share of the pool.
6. You can then trade or hold these pool tokens on the Blueshift DEX or other supporting platforms.

Remember that providing liquidity to the Cardano Index Portfolio involves risks, so it’s important to understand the potential benefits and drawbacks before making any decisions. Also, make sure you have enough knowledge of the platform, the process, and the risks involved.

How to Withdraw Liquidity from the Cardano Index

If you have provided liquidity to the Cardano Index Portfolio on the Blueshift Decentralized Exchange or have the Cardano Index LP token obtained from another DEX or the VyFinance vault and want to remove your liquidity, you can follow these steps:

1. Connect your wallet to the Blueshift DEX platform.
2. Navigate to the Cardano Index Portfolio page and select the “Withdraw” option.
3. Choose the amount of liquidity you want to remove and the tokens you want to receive in exchange.
4. Confirm the transaction and approve the spending of your liquidity pool tokens.
5. Once the transaction is complete, you will receive your tokens back along with any earned fees that you may have accumulated while providing liquidity to the pool.

It’s important to note that removing liquidity from a pool can result in impermanent loss if the prices of the tokens in the pool have changed since you initially provided liquidity. Impermanent loss is a temporary loss that occurs when the price ratio of the tokens in the pool changes compared to when you first provided liquidity. To minimize impermanent loss, it’s recommended to provide liquidity to a pool that has low volatility or to use stablecoins.

Also, it’s important to monitor the liquidity of the pool before removing your liquidity, as removing a large amount of liquidity from a pool can impact its liquidity and trading volume.

Step By Step Guide on Bridging NMRK Tokens to Milkomeda