# Farming ### **Introduction to the Concept** For a decentralized exchange (DEX) like SmarDex to function efficiently, it relies on the lending of tokens by its users. These tokens facilitate transactions between different participants. Liquidity providers, by fueling the [Volatility Vaults](#user-content-fn-1)[^1] with their paired tokens, are at the heart of this system. In recognition of their vital contribution, SmarDex rewards these contributors with [Volatility Vaults LP tokens](#user-content-fn-2)[^2] (also called LP tokens), distributed proportionally to their contribution in the [Volatility Vault](#user-content-fn-1)[^1]. These tokens not only entitle them to a portion of the fees generated from transactions within this [Volatility Vault](#user-content-fn-1)[^1] but also offer additional rewards through farming. ### **The Importance of Liquidity** The liquidity of a [Volatility Vault](#user-content-fn-1)[^1] is paramount for ensuring seamless trades, contributing to the smooth operation of the platform, which is crucial for an optimal user experience and market efficiency. To stimulate this essential liquidity, SmarDex launches Farming Campaigns to reward liquidity providers. They simply need to stake their [LP tokens](#user-content-fn-3)[^3] in the corresponding farming pool to receive attractive rewards. ### **The Farming Process Explained** Imagine that you invest $3,000 in the ETH-WBTC [Volatility Vault](#user-content-fn-1)[^1] on SmarDex, which has a total liquidity of $100,000. Your contribution thus represents 3% of the total liquidity of this [Volatility Vault](#user-content-fn-1)[^1], and you accordingly receive 3% of the corresponding LP tokens. To benefit from the rewards of the Farming Campaign, you need to go to the "Farming" section on SmarDex.io and stake your [LP tokens](#user-content-fn-3)[^3] in the corresponding farming pool. By doing this, you activate your right to collect the yields promised by the active farming campaign.
## How to use SmarDex protocol Farms ### 1. Navigate Farming Tab

### 2. Connect your web3 wallet (ex. Metamask, Coinbase Wallet, etc.)

Select your wallet from the list and connect it

### 3. Make sure you're on the chain you want to use

You can change chain by clicking here, in this example we are connected to polygon

### 4. Select the Farm associated with the token pair you've added to the Volatility Vault

### 5. Start to stake your LP token

Choose the amount of LP token you want to farm

### 6. Approve the LP token smart contract to interact with your wallet

Approve LP token to interact with your wallet

Set the authorized spending limit for the smart contract and click 'Next'

### 7. Confirm the farming of your LP tokens

Your LP tokens have been successfully staked in the Farming Pool!
You can verify it by checking the staked amount (here 65.02 usdc.e and 3176.48 SDEX, all worthing ~ 143$ at this time)

### ### You can then easily harvest your rewards, unstake, or stake more LP tokens as desired

[^1]: SmarDex's intelligent Liquidity Pools [^2]: **Volatility Vault Liquidity Providing Tokens (LP tokens):** \ These are tokens received by liquidity providers as proof of their contribution to a Liquidity Pool (Volatility Vaults at SmarDex) in a decentralized exchange. LP Tokens signify the stake held and can be used for various DeFi activities, such as yield farming. [^3]: **LP tokens (or Volatility Vault LP token):** \ These are tokens received by liquidity providers as proof of their contribution to a Liquidity Pool (Volatility Vaults at SmarDex) in a decentralized exchange. LP Tokens signify the stake held and can be used for various DeFi activities, such as yield farming.