This is my second investment in the liquidity pool and my investment journey continues. I have added more swap.hive and #colony tokens. As I told last week that I will keep adding investment in the liquidity pool once a week. So today I have added more investment and now I have added total of 2.58 Hive and 3325 Colony tokens in the pool. I am getting around 20% APR at the current market situation.
What is the benefit of this investment and how to access the liquidity pool and invest in it? Along with this, what are the benefits and losses of this liquidity pool? In todays post I will cover these three questions which will surely remove many users confusion. Some friends asked me about how this liqudity pool works so I decided to share the details in brief.
First lets talk about what is the benefit of this investment.
The real investor is the one who always invests with longterm planning. Every investor who thinks for short term always faces loss. Thats why whenever you think to invest keep long term in mind because only long term investment gives you profit.
In the same way, if I talk about liquidity pool investment it will give you profit only in the long term. If you keep it for short term then there is a high chance you will face loss. Thats why for investing in this pool think of long term holding then you will get 100% profit. I can write this down...
You must have heard a famous saying “Long-term investors always win.” This is because they stay safe from short term market fluctuations and in the long run every coin goes up. The same thing happens in liquidity pool also. We know that Hive has a very strong future and its price will grow in the long term.
In the same way if I talk about the #colony token it is a hot topic right now and one of the best for investment. The reason is that this is the gaming token of #arcadecolony and is growing very well till now. Besides this as long as #Hive-Engine keeps performing well the benefit will also go to Colony token.
So you can guess that this is a great project and will grow very well in the long term. Isnt it better to start investing in both these tokens and hold for the long term? The main two benefits are.. first, you will gain wealth. The longer you hold the more your capital will grow and multiply. The second benefit is passive income which you keep getting on every transaction.
You have provided liquidity for traders. When any trader does trading you get a share on every transaction. According to the current market situation liquidity investors are getting 20% APR. So isnt it better to take full benefit from this investment?
The way to invest in liquidity pool is very easy.
First, log in to your account on #hive-engine and buy swap.hive and Colony tokens. Buy in the same quantity as you want to add both in the liquidity pool. This is must to have the same quantity before adding to the liquidity pool.
After that log in to your account on #tribaldex exchange. Go to the swap option and create liquidity there. If you already have a liquidity pool created then just add more like I did and as shown in the picture. You need to write the amount of swap.hive and also the quantity of Colony tokens. After adding you will see your investment in the liquidity positions and can keep enjoying profit.
Now the third question.. what are the benefits and losses of investing in this pool? As explained above the benefits are passive income plus wealth growth. But there are also losses in this investment. If you hold for short term and the price of any token goes down then you face impermanent loss.
Impermanent loss
means the temporary change caused by price fluctuation that rebalances your tokens. For example, if the price of Colony token goes down then your Hive investment keeps shifting into Colony. And when the price recovers it rebalances again back into Hive. This is called impermanent loss.
If the price of both tokens goes down then it is not impermanent loss but real loss because both tokens prices have fallen and you faced capital loss. But since you are holding for the long term you will not book that loss.
The third case can be when Hive price pumps up but the other token stays at its initial price. In this case there is overall profit but due to rebalancing your profit becomes a bit less. If you understand these three cases properly then you will easily know your profit and loss condition.
Have you started your investment in liquidity pool yet? In which pair have you invested and what benefit are you getting? Share your opinion in the comment section.
I hope you find this post useful and informative. If you do, please remember to reblog it so that it reaches as many people as possible and that they can benefit the most from it. Also, remember to upvote, which will help me financially and grow my account.
Thank You!
Best Wishes.
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