Investing in a liquidity pool is very easy but have you ever thought what its real purpose is?
Is it only to invest simply and hold after that?
What is the role of a better strategy in liquidity pool?
If someone invests blindly will it still be profitable and keep giving passive income?
These are the questions which you must understand before investing in LP. To be very true, if you are not aware about these questions and some more about LP then there will be no need for you to invest because you will book losses. You will get all of these points in this post, must read till the end.
Surely, LP is a different investment world which is very wide and a great place for investors to invest. I am seeing that peoples interest in this investment is increasing a lot. Everyone now wants to invest in a liquidity pool so that a source of passive income opens and they start earning from this market.
Liqudity Pool: The main source of investment in #HIVE..
In the Hive ecosystem this is the top source of investment from which many investors have already got benefit and they are continue with their invesmtents. Here you can pair your favorite tokens and invest. Choose such tokens whose future is good, whose project is strong, invest in them so that you get passive income and also token appreciation
If a balanced pair is selected in the liquidity pool then I think it will give you profit in every market condition whether its bullish or bearish. Interested hay?
Remember this one thing before investment that you must choose such tokens which are fundamentally strong, such a pair which has more user attention and more possibility of transactions, such a pair can give you good profit
For example, till now swap.hive and Colony are counted as a better pair. Hive works like a slow coin while Colony has more price fluctuation. Because users are more interested in gaming so they are investing in Colony token and base token will remain Hive. This is a pair in which transactions will keep happening more and there will also be token appreciation in the long run.
I see that many Hive users do not know about liquidity pool but they are investing. such users will either not get profit or ends their investment with loss. That is because before every investment it is very important to understand that market.
For example, if I do not know about crypto then my first responsibility is to understand it well and then start investment. In the same way if someone wants to invest in LP it is necessary to understand it well. How profit and loss is possible in it, how passive income is received, what is impermanent loss, how token appreciation is possible under which strategy and why it is important to keep changing the strategy. ( I have a brief detail about all these in my LP post)
Remember that these things work in every investment market but here they apply more. I think if any investor invests and follows the same strategy and only holds it, he will get profit but not as much as that investor will get who keeps changing his strategy in every market scenario.
Surely you must have got a question in your mind that why we keep changing strategy and what will be its benefit? In liquidity pool it is better to select such a pair whose future is good and whose demand in market is high. There are some pairs whose demand is better today but after one week their demand decreases, will you still keep investing in the same pair?
Keep updating your strategy and move toward the pair thats in demand
No no, the real wisdom will be to change the strategy, change the pair and move toward such a pair whose demand is increasing. such a pair in which transactions are happening more. For example, these days the demand is more in Colony token users recommend that Colony should be paired with swap.hive.
These both at present are a very good pair whose APR is up to 25%. In the same way both tokens also have a very good future with passive income you will also get token appreciation. But who knows after one month this pair becomes weak and transactions decrease? It will surely shift towards another pair, in this case you must find the pair which is more demanding.
In such a situation you should not only hold but also understand the market,
Keep check and balance of your portfolio, keep checking your tokens from time to time and keep watching their demand in market. If you move under a good strategy then surely you will get profit from this investment pool.
Have you invested in a liquidity pool? If yes, then in which pair and what is its main purpose? Express 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.
IMAGE TAKEN FROM CANVA Tribaldex
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