Initializing Pools

On BeraSwap, any user can initialize a liquidity pool for an arbitrary pair of tokens. The user who initializes the pool has the ability to select the starting price ratio between the two tokens.

Users can create new BeraSwap liquidity pools here: https://docs.berachain.com//pools/create

To prevent spam and ensure the creation of meaningful pools, BeraSwap requires users to permanently burn a small, economically insignificant quantity of both tokens when initializing a new pool.

Pool Initialization Steps

1. Navigate to the "Pool" section of the BeraSwap app and select "Create a Pool"
2. Select the two tokens you wish to create a pool for
3. Specify the pool fees, collected on each swap
4. Set initial pool token ratios and amount of liquidity to add
5. Confirm the pool creation transaction

Selecting the Ratio

During pool creation, the price/ratio of the tokens is set based on amount of "quote" tokens per "base" token. Using the above scenario as an example, and assuming that the price of $WETH is $3000,theinitialpriceof‘$HONEYis set from the initial3000` ratio, that is:

• Each $WETH is worth 3000 $HONEY
• Each $HONEY is worth 0.000333 $WETH
• The initial price of $HONEY is $3000 * 0.000333 = $1

If there is a known price to both tokens, pool creators should endeavour to set the initial price ratio to match the known prices. If the price ratio is set too high or too low, arbitrageurs will quickly correct the price to match the market.