# Add Liquidity Overview

### What is Adding Liquidity?

In DLMM, adding liquidity means:

* Depositing token pairs into specific price bins
* Receiving a position NFT that tracks your share
* Earning fees from trades that occur in your bins
* Managing liquidity across discrete price levels

### Core Concepts

#### Position NFTs

Your liquidity is represented by a **Position NFT** that:

* Tracks your share across multiple bins
* Accumulates trading fees
* Can be transferred or sold
* Allows partial withdrawals

#### Bins and Price Ranges

* Each bin represents a specific price level
* You choose which bins to add liquidity to
* Only the "active bin" facilitates trades
* Price moves by jumping between bins

#### Distribution Strategies

How you spread liquidity across bins:

* **SPOT**: Uniform distribution
* **CURVE**: Concentrated around current price
* **BID-ASK**: Weighted away from center
* **CUSTOM**: Manual bin selection

### The Workflow

#### 1. Choose Your Pair

```typescript
const pair = await sdk.Pair.getPair(pairAddress);
const currentPrice = calculatePrice(pair.parameters.active_id);
```

#### 2. Select Distribution Strategy

Decide how to allocate liquidity:

* Tight range for higher fee capture
* Wide range for consistent coverage
* Strategic placement for limit orders

#### 3. Calculate Token Amounts

DLMM requires specific ratios per bin:

* Bins below active: 100% token Y
* Active bin: Mixed ratio
* Bins above active: 100% token X

#### 4. Execute Transaction

Two options available:

* Create new position + add liquidity
* Add to existing position

### Key Considerations

#### Capital Efficiency

* Narrower range = higher fee share
* Wider range = more consistent fees
* Active bin earns most fees

#### Impermanent Loss

* Occurs when price moves from entry
* Wider ranges reduce IL risk
* Consider correlation of assets

#### Rebalancing Needs

* Narrow ranges need more management
* Wide ranges are more passive
* Monitor active bin position

### Best Practices

* **Start Small**: Test with small amounts first
* **Monitor Performance**: Track which bins earn most fees
* **Consider Volatility**: Adjust range based on pair behavior
* **Plan Exit**: Know your withdrawal strategy

### Common Patterns

#### Passive Income Strategy

* Use SPOT distribution
* Wide range (50-100 bins)
* Minimal management needed

#### Active Trading Strategy

* Use CURVE distribution
* Tight range (10-20 bins)
* Rebalance frequently

#### Limit Order Strategy

* Use CUSTOM distribution
* Single bin placement
* Acts like a limit order

### Next Steps

Ready to add liquidity? Choose your approach:

1. **Quick Start**: [Add to New Position](https://docs.ferra.ag/integration/dlmm/typescript-sdk/add-liquidity/add-to-new-position) - One transaction setup
2. **Existing Position**: [Add to Existing Position](https://docs.ferra.ag/integration/dlmm/typescript-sdk/add-liquidity/add-to-existing-position) - Increase current liquidity
3. **Learn Distributions**: Explore [SPOT](https://docs.ferra.ag/integration/dlmm/typescript-sdk/add-liquidity/spot-distribution), [CURVE](https://docs.ferra.ag/integration/dlmm/typescript-sdk/add-liquidity/curve-distribution), or [BID-ASK](https://docs.ferra.ag/integration/dlmm/typescript-sdk/add-liquidity/bid-ask-distribution)

### Related Topics

* [Calculate Token Amounts](#id-3.-calculate-token-amounts) - Required tokens per bin
* [Position Management](https://docs.ferra.ag/integration/dlmm/typescript-sdk/position-management) - Managing positions
* [Fee Structure](https://docs.ferra.ag/integration/dlmm/typescript-sdk/fees-and-analytics/fee-structure) - How fees accumulate