# Sphynx Pyramid (Farming)

What do farmers do? Well, to put it simply: they _harvest_ crops and earn from the fruits of their labor. This is similar to what you’ll be doing as you’ll creating a ratio of LP tokens by providing liquidity for the pair you're trying to farm, and will then be earning through yield farming.

## “Okay, that makes sense. So what are the next steps?”

Let's start by heading over to SphynxSwap ([https://thesphynx.co](https://thesphynx.co)). Once you're on the main page, you’ll find various tabs such as Trade, Farms, Pools, etc. — you want to click “**Farms**”.&#x20;

![](https://1120778327-files.gitbook.io/~/files/v0/b/gitbook-x-prod.appspot.com/o/spaces%2F-MghTxZPHJuXEpTol7Jf%2Fuploads%2FxmtlggExkPZrVjqcvZk8%2Fimage.png?alt=media\&token=16790787-495e-46e4-8d06-b99e114f7393)

Clicking "**Farms**" will take you to our Pyramid Farms.

![](https://lh3.googleusercontent.com/Udh3atFHlvSAuqmZdQaeqjbGhvFxGdcp9D2lSrtLaLC0xqa6HZjK-_tzauKXtIS899tlJGN2RiWUhuMWrLnB910KVMyndvidEW-At8X1xjp2sjn_AQEJRuWjImpjIcAk14ur7j_T=s0)

A basic rundown of what's to come is that you're going to need some "LP tokens'' to engage with the farms. That's because farms can only accept their own exact LP token. For example, the "**SPHYNX-BNB**" farm will only accept SPHYNX-BNB LP Tokens. To get this exact LP token, you'll need to provide liquidity for that trading pair. So to get **SPHYNX-BNB&#x20;**_**LP tokens**_, you'll first have to provide liquidity for the **SPHYNX-BNB** _**pair**_.

Once you have found the farm of your choice, which for this example is going to be "**SPHYNX-BNB**", you will add liquidity to get your LP tokens. How you’ll do this is by clicking on the row of the farm you’ve selected, which will open up to show more details.&#x20;

![](https://lh5.googleusercontent.com/t213Vp0Gg8J-cwtn50m7-xjKQ6nSP8nD4cvnF7ZujqgoMJMziXuNobRKFd_38osr0BBc4K-XvAO1ZOOeL4JGXs-fa3nQI_SOGRdrhH1Tr_AeNBTN5l0b7Vltf-9dIb7osNJfwOFU=s0)

On the left, you’ll see some options.&#x20;

Click the “**Get SPHYNX-BNB LP**” (for this example) link to open up the “**Add Liquidity**” page for your farm's pair.&#x20;

An important thing to note here is that providing liquidity to the pool requires your tokens to be in a 50/50 ratio.&#x20;

Let’s say you have 65 **$BNB** and want to allocate only 60 **$BNB** to farming.&#x20;

One way to go about this would be converting 30 **$BNB** into **$SPHYNX**, and doing so would have you in a 50/50 ratio, with you providing 30 **$BNB** of liquidity with 30 **$BNB** worth of **$SPHYNX**.&#x20;

Please always remember to leave a bit of **$BNB** in your wallet to cover the gas fees for such transactions!

If you're content with the pair, click on "**Supply".** Doing so will trigger a prompt that'll read "**Confirm Supply**". Once you click on this button, you will have successfully added liquidity.&#x20;

An important thing to note here is that the liquidity that gets added represents your share of the liquidity pool. You can think of this as owning shares in the pool, which earns a small reward for every swap that goes through the pool.

Now that we've added liquidity, let's move on back to the Pyramid Farms. Click anywhere on the row showing your pair and it’ll expand to show more details. When you’re ready, click the "**Enable**" button and confirm your action in your wallet.&#x20;

After a short wait, the "**Enable**" button will change to "**Stake LP**". Clicking that will open up a new window. Type the amount of LP tokens you would like to farm with into the field, or just click "**Max**" to use all of your LP tokens. When you have the amount entered, the "**Confirm**" button will light up, and once you click that, your wallet will ask you to confirm your action.&#x20;

Selecting "**Harvest**" will harvest your **$SPHYNX** rewards. You can collect these rewards—powered with 400% APR—and use them to get more LP tokens, stake them in Nile Pools, use them to play the Lottery, or anything else you’d like.

## “I was hearing about impermanent loss when learning about farms. What’s that about?!”

Liquidity protocols enable essentially anyone with funds to become a market maker and earn trading fees. Democratizing market making has enabled a lot of frictionless economic activity in the crypto space. However, by providing liquidity on any platform, there is always going to be a risk of impermanent loss.&#x20;

Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit.

Pools that contain assets that remain in a relatively small price range will be less exposed to impermanent loss. Stable coins—such as **$USDT**, **$USDC** and **$BUSD**—will stay in a “stable” price range, meaning there’s a smaller risk of impermanent loss for liquidity providers or LPs.

Say we have an investor—let’s call him Pharaoh—and he deposits 1 **$BNB** and 12 **$DOT**. In this particular situation, the deposited token pair needs to be of equivalent value. This means that the price of **$BNB** is 12 **$DOT** at the time of deposit. This also means that the dollar value of Pharaoh's deposit is $422 (as of right now) at the time of deposit.

But because the price of tokens relies on the ratios of their liquidity pools, their prices can separate from the prices elsewhere. So imagine a massive leg up comes for **$BNB**, bringing its value in terms of **$DOT** to 25 **$DOT**/**$BNB**. While this is going on, arbitrage traders will be adding **$DOT** to the pool and removing **$BNB** from it until the ratio reflects the current price. So what’ll happen is that while liquidity remains constant in the pool, the ratio of the assets in it changes.

This is “impermanent loss” in a nutshell.\
