What are liquidity pools, and how to add liquidity to hive-engine tokens.

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▶️ Watch on 3Speak


So a few days back @mistural asked me for how to add liquidity to the swap.hive:lvl liquidity pool. I tried my best explaining,but couldn't really break it down well enough in dm, so I decided why not make a post about it explaining everything. So in this post I'll be explaining the concept of liquidity pools, telling you the benefits and risks involved with adding liquidity. The video above shows how to add liquidity to hive-engine tokens using beeswap

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What is a liquidity pool?

As we all know, when you want to buy or swap a token on a conventional exchange, you enter the amount we want to swap and the price you are willing to pay for it. Then you have to wait until someone else who's trade corresponds with yours arrives before being able to make the trade.

Now in order to reduce that stress of waiting, liquidity pools were created. A liquidity pool is a smart contract that contains equal amounts of two tokens in a 50:50 ratio (it can be more than two, but I don't know much about those). The reason those two tokens are there is so that whenever you want to buy or swap between the two tokens, you don't need to wait for someone else to be available before making those swaps. For each transfer or swap you perform you are charged a small fee, called transaction fees.

Note that since they are in 50:50 ratio, the more you buy one token the more expensive it becomes, and the less expensive the other one becomes,such that the ratio of both tokens in the pool is always 50:50.

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Why should I add liquidity?

Yes, so for each transfer done on that liquidity pool, a small fee is paid. Now when several people do transactions on that liquidity pool the fees are accumulated and shared among those who added liquidity according to how much they added to the pool. Other than those, some liquidity pools add extra rewards like other tokens that are shared among those who add liquidity. A lot of hive-engine liquidity pools do this.

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Risks involved in adding liquidity

There are two major risks involved in providing liquidity. The first one is

Impermanent loss: This is when you would have made more profit or less loss if you had just held the tokens rather than providing liquidity. This can occur under different circumstances.

  • the price of one token rises and the other dips. (you'll lose a lot of money quickly when this happens)

  • the price of one rises and the other remains the same. (you gain profit, but it would have been more if you had just held)

  • the price of one dips and the other remains the same. (you would have made a loss if you held, but it wouldn't have been this much)

The greater the deviation from the original price, the greater your impermanent loss will be. If they both rise or drop at the same rate. There'll be no impermanent loss.

Note it's called impermanent loss because it can be corrected if the price goes back to how it was when you bought it. As long as you don't withdraw it's still impermanent, but once you do it becomes permanent.

Rugpulls:This one is quite common nowadays. This is when the owners of the token remove all the liquidity from the pool and flee. All those who hold the token, as well as those who provided liquidity lose everything.

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Note that you can always remove liquidity at any time.

I hope with this little I've written, I've been able to make you understand even a little bit about liquidity pools. Thanks for reading.


▶️ 3Speak



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21 comments
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The operators doing V2K with remote neural monitoring want me to believe this lady @battleaxe is an operator. She is involved in the same discord groups around @fyrstikken and friends. Her discord is Battleaxe#1003. Shes in some groups with seemingly detached characters that dont even acknowledge the others in the group, looking oddly staged. She starts projects and does nothing with it or the delegations after its used to sway people. Like @steempowertwins does<------fake along with her @teamgood <------fake. No substance in her comments and has a following that adores her for what? Life coach she is not nor is she insightful with any meaningful skills to follow. Ruler of pixie dust maybe? I would like for someone to show me but probably wont out fear maybe? @fyrstikken groups around him down voted me into censored and not viewable on my accounts as soon I told what they were doing.
I cant prove @battleaxe is the one directly doing the V2K and RNM. Doing it requires more than one person at the least. It cant be done alone. She cant prove she is not one of the ones doing V2K because she cant and could care less. I guarantee she knows this is going around and still wont prove it because she cant. Many of us here can prove what they have been doing to survive the past 5 years. What does she live off of? It definitely isnt in public view here.

I was drugged in my home covertly, it ended badly. They have been trying to kill me using RNM with applied V2K mental games while revealing as many accessories to the crime as they can. I bet nobody does anything at all. Ask @battleaxe to prove it. I bet she wont. Pretty serious accusations to just blow off and leave the crypto community hanging in fear of this danger.

They want me to believe the V2K and RNM in me is being broadcast from her location. And what the fuck is "HOMELAND SECURITY" doing about this shit? I think stumbling over their own dicks maybe? Just like they did and are doing with the Havana Syndrome. They should start by looking at the communications between the top witnesses of Hive and the connection to @fyrstikken groups. Google his fucking name and see where his other interests lie around at least once maybe? The connections between @fyrstikken groups and all the exchanges built for Hive? Bet that would reveal some crazy ball less nutty shit. Homeland security should start preparing for their own incarcerations seeing how sloppy this was done. Patriot act my ass. Think we are really fools? Bad position your not getting out of. Dont be last to blow the whistle. Who will protect you?

People in and around @fyrstikkens groups are reckless and should have shown the proper media what they had before taking me hostage for 5 long torturing years and counting. That is a long time to wait for someone to die.

What would you say while having a gun pointed at your head from an undisclosed location? Have people find it? My hands are tied while they play like children with a gun to my head. Its a terrorist act on American soil while some yawn and say its not real or Im a mental case. Many know its real. This is an ignored detrimental to humanity domestic threat. Ask informed soldiers in the American military what their oath is and why nothing is being done. Nobody has I guess. Maybe someone told ill informed soldiers they cant protect America from military leaders in control that have ill intent. How do we protect locked up soldiers prevented from telling the truth from being treated as criminals? Not to mention civilians we let our leaders treat the same way. https://ecency.com/fyrstikken/@fairandbalanced/i-am-the-only-motherfucker-on-the-internet-pointing-to-a-direct-source-for-voice-to-skull-electronic-terrorism-terrorism

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Lovely Post, so helpful and well detailed.
Bravo dear👏❤️

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Impermanent loss is very important and many people either ignore it or have no idea about it!

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Yeah a lot of people miss it. That's why it's best to add liquidity to coins with stable price. But stable coins have less rewards.

No risk no reward they say.

!PIZZA

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hehe I go for the rewards and don't do it with stable coins 🤣🤣🤣

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So that's the meaning of impermanent loss. Now I need to figure out what "slippage" means.

Posted Using LeoFinance Beta

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Thank you so much for sharing this, I really appreciate

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I was amazed when I saw this, thanks alot for sharing

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