Help me understand DeFi Pools, win some LEO and PIZZA!

Ok so I was trying to explain the Tribal Dex pools to someone and why the amount of tokens in your share can shift... however I have this nagging feel I am getting it wrong so I want to turn to you fine people

Look at my thoughts below and correct me and win some sweet Leo,

I have at least 10 to give out and ill also drop some PIZZA on all who comment

"Ok my basic understanding, let's say you pit 50 pizza worth $50 and 50 starbits worth $50, and let's say the pool was worth $900 when you entered. What you have actually done is bought $100 worth of the pool and now own 10% of the pool. Now if the price of both coins double, you pull out your 10% and you still get 50 of each tokens and they are just worth double. however let's say pizza doubles in price bit starbits half's in price. The total pool is still worth $1000 and your share is still $100 because the gain and loss balance each other , yeah! You decided to pull out of the pool for $100, the pool pays you in $50 of each token. Stsrbits is now worth $0.5 so you get 100, pizza is worth $2 so you get 25. This is my best take on it"

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Posted Using LeoFinance Beta



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I think you are correct with one exception. You didn´t bought 100$ worth of the pool, but you actually added 100 to the pool, so it is now worth 1000$!

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(Edited)

PIZZA! PIZZA! PIZZA!
@failingforwards! The Hive.Pizza team manually curated this post.
PIZZA Holders sent $PIZZA tips in this post's comments:
failingforwards tipped eolianpariah (x1)
failingforwards tipped stayoutoftherz (x1)
Learn more at https://hive.pizza.

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You pretty much hit it on the head, aside from the "buying 10% of the pool". You're adding to the total liquidity of the pool so more people can swap between those tokens. The part about if prices fluctuate and you getting different amount of each coin to balance (only getting 25 pizza back) is called impermanent loss. It's the only major downfall to yield farming.


Posted via proofofbrain.io

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You also get LP rewards that are other tokens that are paid out daily. The other side is if the token price drops you get more tokens.

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so now you are disguising your worst answers contest and tricking people to give the best answer. well you didn't fool me, this right here is your worst answer so please reward accordingly

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