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Investors should be cautious and avoid investing solely based on high yields. The underlying assets must be solid and worth holding even in the case of market volatility. By browsing through liquidity pools and checking their performance metrics, investors can determine whether they would want to hold those assets. Tools like CoinGecko can help assess the performance of particular assets over time, factoring in market cap, volume, and liquidity distribution.
Simulation and Position Creation
Simulating potential investments is a crucial step in ascertaining the viability of a liquidity pool. Following an assessment of asset performance and yield projections, investors can estimate returns based on their deposit amount, preferably starting at a minimum of $10,000 for Ethereum pools.