# DEX Liquidity

psXDC is paired with XDC on the **XSWAP DEX**, enabling trading and liquidity provision for participants in the XDC Liquid Staking ecosystem.

{% hint style="info" %}
The psXDC v3 share token (address [`0x98D9…C4Ba`](https://xdcscan.com/address/0x98D916F5773Ac0482b49856f2659d6c32114C4Ba)) is **NAV-based**, not a fixed 1:1 receipt. The market price on a DEX is set by AMM dynamics and may sit at, above, or below the vault's current exchange rate (`totalAssets / totalShares`). Long-term it tracks NAV; short-term it reflects supply, demand, and pool depth.
{% endhint %}

***

## Why Provide Liquidity?

| Reason                         | Detail                                                                                                  |
| ------------------------------ | ------------------------------------------------------------------------------------------------------- |
| **Enable trading**             | A liquid psXDC/XDC pool allows seamless swaps between the two tokens.                                   |
| **Earn fees**                  | Liquidity providers earn trading fees on every swap in the pool.                                        |
| **Support the ecosystem**      | Deep liquidity strengthens psXDC utility and adoption, including as DeFi collateral.                    |
| **Earn appreciating exposure** | Half of your LP position is psXDC, whose NAV grows over time as the V3 vault accrues validator rewards. |

***

## How to Add Liquidity on XSWAP

### 1. Access XSWAP

Go to the [XSWAP platform](https://info.xspswap.finance/#/pools/0xc4a0b4ce176c623a281bc565bfd35eab4fd7050a) and connect your wallet.

### 2. Select the psXDC/XDC Pair

Find the liquidity pools section and search for the psXDC/XDC trading pair. Verify the pool's `psXDC` token address matches the V3 vault ([`0x98D9…C4Ba`](https://xdcscan.com/address/0x98D916F5773Ac0482b49856f2659d6c32114C4Ba)) before depositing — older pools may still hold the legacy V2 psXDC token (`0x9B8e12b0BAC165B86967E771d98B520Ec3F665A6`).

### 3. Prepare Tokens

Ensure you have an approximately equal value of psXDC v3 and XDC in your wallet. Note that the **value** of psXDC v3 ≠ 1 XDC — it equals the current vault exchange rate. The XSWAP UI accounts for this when computing how much of each token to deposit.

### 4. Add Liquidity

Enter the amounts you want to deposit and confirm the transaction. You will receive LP tokens representing your pool share.

### 5. Track Your Position

Monitor your position and earned fees through the XSWAP interface.

***

## Managing Your Position

* **Monitor NAV vs market price** — psXDC's protocol NAV grows over time. The DEX pool may not always track NAV in real-time; sustained gaps create arbitrage opportunities.
* **Impermanent loss** — be aware of IL risk if the NAV and pool ratio diverge significantly.
* **Rebalance** — add or withdraw liquidity periodically to maintain an optimal position.
* **Trading fees** — accrue automatically in your LP position. Withdraw LP tokens to claim.

***

## Withdrawing Liquidity

1. Go to the liquidity pool section on XSWAP.
2. Select your psXDC/XDC position.
3. Choose the amount to withdraw.
4. Confirm the transaction to receive your share of psXDC and XDC plus accrued fees.

***

## Protocol vs DEX exit — when to use which

| Path                                    | When to use                                                                                                                         |
| --------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------- |
| **DEX swap (psXDC → XDC)**              | You need XDC immediately and are willing to accept the current market price (which may include a small discount or premium to NAV). |
| **Protocol redeem (`redeemWithQueue`)** | You want the exact NAV value; settles instantly when the vault buffer covers it, otherwise via the on-chain FIFO queue.             |

See [Withdrawals: Instant vs Queued](/products/xdc-liquid-staking/staking-guide/withdrawals-instant-vs-queued.md) for how the protocol path chooses between instant and queued settlement.

***

## Best Practices

* Stay informed on staking rewards and market activity.
* Diversify across pools to mitigate risk.
* Compound returns by reinvesting trading fees.
* Follow [PrimeStaking](https://primestaking.xyz) and XSWAP updates for pool parameter changes.


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