Lâu rồi mình chưa viết nên lấy đỡ content platform đăng lên đây để thể hiện alive blog
PPL makes big money for liquidity providing
This guy makes 26.79% profit in 18hrs for doing so
So what is Liquidity providing?
In the blockchain world, how does the swap work?
We have
- A pool that keeps 2 assets (maybe more) - which is a smart contract
- Every swap is about input into the pool Asset 1 and then get Asset 2 in return
- The more assets live inside the pool, the less price slippage
How Trader and Liquidity Provider work
We have 2 types of users come into the party
- Trader who wants to swap between Asset 1 and Asset 2
- Liquidity provider who put their token into the pool and then get the Trading Fee for doing so
Why can a Liquidity Provider make so much profit?
- High trading volume on the pool results in high trading fees.
- Liquidity Providers enhance capital efficiency in the pool.
- All CLMM pools collectively generated ~$2M in the last 24 hours.
The market controls the volume but we can control our capital efficiency by
- Deposit more tokens into the pool if you're whale 🐳
- Adjust your liquidity positions range - Thanks to CLMM by Uniswap V3
Pros
- Generate revenue from trading fees, so you're not affected by price fluctuations.
- Enjoy stable income compared to trading; just watch your fee growth.
Cons
- The concept is quite hard for most retail users
- Adjust your liquidity positions is not an easy job
- You might lose for providing liquidity (Impermanent loss)
That's the Liquidity Provider's mission.
Earning a buck is tough, but we're crafting a tool to streamline the process. Join us at the @ColosseumOrg Renaissance Hackathon.
💪 Follow me for more content
❤️ Like and Share if you find it's helpful