Liquidity pools (LPs) are known as smart contracts. These are pools that hold 1 or more tokens or coins in one pool. This pool is created by users like you and me, by giving our funds/money/tokens to the pool in a set ratio. A typical ratio is 50/50, meaning that you will give for example USDC the same amount you give AVAX (aka USDC-AVAX LP). If you browse DeBank long enough, you’ll see some people invest in triple or quadruple LPs, usually all the Stablecoins combined.
- Decide what kind of banker you want to be; safest methods ranked imo:
- Invest in Stablecoin Token LP
- Invest in Single Asset Farms
- Invest in Network FarmsJOE-AVAX (Avalance)
- *-BNB (Binance)
- MATIC-* (Polygon)
- Invest in non-Stablecoin Farms (aka, Degen investing) that include Altcoins (aka Shitcoins)
- When trading happens, fees are generated and the fees will be given to the LP owners
- The more TVL (Total Value Locked) liquidity a pool has the more likely people will participate in the pool and lower the APY.
- If to many people dump into your favorite LP, you might not be able to exit with locked profit.
- If the project / protocol is a very good one, none of this matters because people will believe and continue to invest.
- Being able to accumulate in LP projects that you are ALSO about to pre-fund IPO is a very magical thing… especially if the project does very well!
- This is why Launchpads are very profitable, you can jump into the infancy stage of any project and dump it for profit quickly.
- Investing in high-quality projects like AVAX usually give guaranteed profit because for them to fail would take a great deal of bad luck, so consider AVAX to be part of your LP ratio.
When investing in a Liquidity Pool, only try to provide money in pools that go up regarding tokens value. Be certain that your Token will goes up in value. For example, I like what the YieldYak team are doing, and I love what TraderJoeXYZ is doing… so I’m more inclined to invest in Network Farms related to very rich projects like TJ, YY and others.
If Liquidity Pool Goes To Zero😂😅🤯