How does a Liquidity Pool work?
Providing a trustless smart contract, which always holds an equal value in both assets.
Adding funds to the pool, creates new pool-tokens. Those pool-tokens can later be used to withdraw funds again.
The pool-token holder earns the pool-taker and pool-withdraw fee.
How much does a Liquidity Pool earn?
The total earning is highly dependent on:
- Taker fee
- Taker volume
- Withdraw fee
- Withdraw volume
- Extra payout by project
Can I only add one asset to the Liquidity Pool ?
No, both assets are needed for deposit.
How save is investing in a Liquidity Pool ?
As save, as the assets in the pool. When one asset of the pool reaches zero value, the poolen token does the same.
In which Liquidity Pool should I invest?
We can not answer this question here, but important criterias are:
- Asset quality
- Pool activity
- Extra payout
- Pool size
Where can I use Liquidity Pools ?
How can I combine a Liquidity Pool with a Market Pegged Asset (MPA) ?
Liquidity Pools, which use a MPA/Collateral pair, can be used to stake a long, neutral or short position.
Example: 1.19.66 – HONEST.BTCBTSMM
- HONEST.BTC Long – BTS Short: Sell 50% of the BTS for the HONEST.BTC part.
- HONEST.BTC/BTS Neutral: Borrow the 50% HONEST.BTC and add an extra 50% BTS.
- HONEST.BTC Short – BTS Long: Use all BTS for borrowing. Sell 50% of your HONEST.BTC for the BTS part.