Thread by @TheCryptoVoice

There are 3 ways of making money with #crypto. Trading, hodling and providing liquidity. The latter is like an evolutionary step to both trading and hodling.

Thread 👇🏻👇🏻👇🏻#bitcoin #DeFi

LPing is like filling a pool with water and getting some of it back everytime someone adds more water to it. The more water you added the more you’re getting back over time. #BEPSwap by @thorchain_org is a perfect example for such a liquidity pool.

The „water“ in #BEPSwap consists of trading pairs like $RUNE / $BNB. $RUNE is the base asset of every @thorchain_org pool which is used to bond the counterpart as an exact match in USD-value. So by adding 50 $BNB you need to add the equivalent in $RUNE too.

This way you „buy“ a certain pool share and earn yield. For our $BNB pool example that means you’re either getting more $RUNE or more $BNB or both every time somebody interacts with the pool by swapping assets or LPing.

To stay profitable you need to check two preconditions:

1) Are you bullish on the pool coins you choose?
2) Is it the right time to invest?

If both are met and you’re sure of it chances are high that you outperform simple hodling USD-wise over a longer time period.

But keep in mind: LPing needs constant monitoring. Depending on price movements, your balances will shift. Taking our example $RUNE / $BNB you might end up having lesser $RUNE and more $BNB or vice versa. Your pool share is always determined in USD.

In a pool water is water.

If you’re doing it right by measuring the above mentioned preconditions your LP shares on #BEPSwap can look like these:

Before deep-diving into LPing I recommend to follow @Bitcoin_Sage and @mehowbrains who are proven @thorchain_org experts. Ask along if you have questions. The $RUNE community is always very supportive.

$BTC $ETH $BNB $DOT