Hello am back again here.
So I will be discussing about Liquidity pool and staking pool and which of is better.
So let's talk me explain liquidity in a very simple term so it will be very easy to understand.
Liquidity is the process of adding value to a token using pair of token which are allow by the Smart Contract.
So liquidity pool is the pool where users who add liquidity to a token use to generate income from the liquidity they provide to a token.
In most project, the Dev mostly prefer to use the stablecoin and the native token of that Blockchain to provide liquidity.
Advantage of Liquidity Pool
The advantage is that you earn the token which you provide liquidity for and it the project grow u get to earn more and the percentage of earning is good.
Disadvantage of Liquidity
Due to decrease in value of the token, if the users who provide liquidity decide to remove there liquidity the value of the token will drop which might make the earn value depreciation.
Now let's talk About Staking Pool
Firstly let me explain Staking
Staking is use by the Blockchain which makes use of Proof of Stake to verify transaction.
So when users stake their token and verify transaction the users who stake their tend to earn some certain percentage from the revenue generated from the gas fee.
Its a technology developed by ETHEREUM to help verify transaction.
So Staking Pool is a pool where users who stake a token earn reward by staking their token. It's similar to liquidity pool but they are different.
Advantage of Staking Pool
Unlike liquidity pool when a staker remove the token he stake, it doesn't affect the price of the token at not even an inch.
Disadvantage of Staking Pool.
Low reward if there are too much staked token.
So let me ask you this question
Which one do you prefer among the two?
Liquidity Pool or Staking Pool
Let me hear your opinion.
Thanks for reading.
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See you soon.