Like many of you I have been busy the last few days on the cubdefi.com app on the Binance Smart Chain. As it was my first ever investment into DeFi, I needed some time to familiarise myself with it and wrap my head around the fact that it is profitable in way I could never have imagined.
The profitability comes with a risk factor though. Especially when you provide liquidity in one of the farms (pools), where most swaps are going in one direction.
I did stake some tokens in the farm for BTCB-BNB. If I would withdraw my tokens now, then I would only get BNB, because aparantly a lot of people have been swapping their BNB for BTC, and it seems I provided my small amount of BTC for that to be possible.
This means that for the stake I put in this farm, I am no longer exposed to BTC. Unless people start swapping BTC for BNB ofcourse. So potentially, because of traders swapping at the right time, I could miss out on positive price action for both BTC and BNB.
That is because when you provide liquidity on cubdefi, you get rewards in CUB. The new token from LeoFinance on the Binance Smart Chain that was airdropped this week to people with Leo Power on hive-engine and people who provide liquidity on Uniswap for wLeo.
As there is a fixed reward shared by those who provide liquidity, it pays off to be early in the pool (farm), when there aren’t many liquidity providers yet, with whom you need to share the rewards.
By the way, I am providing liquidity for the CUB/BNB pair and that farm still has an ROI of about two weeks. Yes, that is invested money doubled in two weeks!
Now I expect this ROI to go down, but it has to go down a lot before it is no longer profitable to provide liquidity.
As a small investor, who has invested only free crypto from faucets, Coinbase earn and crypto earned through Hive, I need a high ROI to be able to grow my portfolio significantly.
Cubdefi has opened my eyes to a whole new world of opportunity. With high risk, but also high reward.
So the question I ask myself is this: Do I need more risk? Should I take more risk? Should I perhaps round up all the little bits of crypto I have liquid and go all in?
Are you new to DeFi? Are you taking a risk? How do you determine how much you invest? I would love to get some responses.
Perhaps then my next post will have the title: I went all-in.
