Question 1

What is a liquidity pool?

Accepted Answer

A liquidity pool is a smart contract that holds a paired reserve of two tokens (such as your newly minted ERC-20 token and MON) to enable decentralized trading. Instead of relying on traditional order books to match buyers and sellers, Decentralized Exchanges (DEXs) use Automated Market Makers (AMMs) to execute trades instantly against this pooled liquidity. When you launch a token on Monad, initializing a liquidity pool is the critical final step - it opens your market to the public, allowing your community to buy and sell 24/7.

Question 2

How much does it cost to add liquidity to my Monad token?

Accepted Answer

We charge absolutely zero platform fees to create a liquidity pool on Monlabs. Using our built-in Add Liquidity feature to list your token on a DEX is 100% free on our end. You only pay the standard, near-zero Monad network gas required to execute the transaction on-chain.

Question 3

How is my liquidity pool created on Monad?

Accepted Answer

Monlabs natively integrates with Uniswap's factory smart contracts to create your market automatically. When you use our interface to add liquidity, our platform interacts directly with the decentralized exchange (DEX) protocol to generate a secure Uniswap V2 or Uniswap V3-style liquidity pool for your ERC-20 token. This ensures your token is instantly tradable on the Monad blockchain using industry standard Automated Market Maker (AMM) infrastructure, without you ever having to write code or navigate complex DEX interfaces.

Question 4

Should I use Uniswap V2 or Uniswap V3 for my liquidity pool?

Accepted Answer

Monlabs supports both V2 and V3, and we default both to an infinite price range (0 to infinity). Uniswap V2 works for all tokens, including Tax Tokens - which MUST use V2 since V3 cannot handle fee-on-transfer mechanics. Uniswap V3 is an excellent choice for standard or mintable tokens.

Question 5

What are LP tokens and how do they work?

Accepted Answer

Liquidity Provider (LP) tokens act as a cryptographic receipt for the assets you supply to a DEX. When you initialize your market on Monad using Monlabs, the DEX mints LP tokens directly to your wallet. They represent your proportional ownership and serve two purposes: yield generation (accruing trading fees) and asset redemption (withdrawing your underlying assets). Many founders lock or burn their LP tokens to prove the initial liquidity is secure.

Question 6

Can I withdraw my liquidity after the token is launched?

Accepted Answer

Yes, you maintain 100% custody. Because you hold the LP tokens, you can remove a percentage or all of your liquidity at any time. However, if you are the primary liquidity provider and you withdraw all paired assets, your token loses its reserve - this halts the AMM and renders the token untradable for your community.

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Frequently asked questions