> For the complete documentation index, see [llms.txt](https://docs.notional.finance/notional-v2/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.notional.finance/notional-v2/liquidity-pools/liquidity-pool-examples/providing-liquidity.md).

# Providing Liquidity

This section will show an example of an LP providing 1000 DAI as liquidity into a single liquidity pool. Since the amount of fDAI the LP needs to mint depends on the liquidity pool's proportion, the example depicts 3 scenarios:

1. When pool proportion is shifted towards DAI (more DAI than fDAI in the pool)
2. When pool proportion is balanced (amount of DAI = amount of fDAI)
3. When pool proportion is shifted towards fDAI (less DAI than fDAI in the pool)

### Before the deposit

Here's what the liquidity pool looks like in each scenario before the LP deposits additional liquidity.

<figure><img src="/files/luY9m5vdljruJnSkBs7K" alt=""><figcaption></figcaption></figure>

To provide liquidity with 1000 DAI the LP must mint +fDAI and -fDAI. After minting, they can use the +fDAI to pair it with DAI and provide liquidity.

### After the deposit

The quantity of +/-fDAI to be minted is computed based on the current balance of funds in the pool, i.e. the proportion. Notice that the +/-fDAI minted (denoted by fDAI supplied in the screenshot) is less in the pool where the proportion of fDAI is lower and vice-versa.

<figure><img src="/files/MHEIdGQRFXecufmgQmBo" alt=""><figcaption></figcaption></figure>

### LP portfolio

After the execution of the deposit, the LP's portfolio consists of the liquidity tokens and -fDAI. A crucial thing to notice is that the exchange rates and the interest rates **never change** when LPs provide liquidity.

<figure><img src="/files/P6ksEChiLNsOvghq44k5" alt=""><figcaption></figcaption></figure>

### Whole example

<figure><img src="/files/kENHLsUDgKrZxWeJMLJT" alt=""><figcaption></figcaption></figure>