What is the benefit of investing in a liquidity pool and how will profit be generated and in which tokens is it better to invest?
This will be the discussion of my todays post. A liquidity pool is an investment option on the TribalDex exchange where you will provide liquidity to the traders. Its a pool where you add liduidity to help traders execute their trades.
What kind of liquidity? For those traders who want to do transactions. You will provide liquidity so their transactions and trading can be completed easily.
On every trade or on every transaction you will get profit. Lets say if you want to provide liquidity in swap.hive and colony tokens then simply you need to select this pair and invest in this pair.
Now when users do transactions in this pair you will keep getting profit. The best benefit of investing in LP is that you come into long term vision, capital gain is possible and passive earning will start.
Remember that token price is volatile and there is a risk of impermanent loss. But if your vision is long term then I think there will be no loss instead you will keep getting profit.
Now the question is, is it better to invest in any pair? No it is not like that. Investing in every pair is risky. First of all you must list strong project tokens, read about their project and understand the project behind that token.
Then see its volume. If you are satisfied with these things then invest in that pair. According to now #Hive and #Colony are the best pairs for investment because they are providing 27% APR for those who are providing liquidity.
This is a short summary about liquidity pool investment. I hope you will understand the risk and profit properly.
THANK YOU!
