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Imagine earning passive income while your assets work for you, quietly generating yields as you sip coffee or binge-watch your favorite series. Welcome to the world of liquidity mining! This lesson delves into what liquidity mining entails, particularly within the Bybit platform, uncovering how you can strategically amplify your crypto earnings. With the rise of decentralized finance (DeFi), liquidity mining has exploded in popularity, offering attractive yields and unique opportunities to engage with the cryptocurrency ecosystem.
From this lesson, you’ll walk away with key takeaways such as:
At its essence, liquidity mining is the process of providing liquidity to decentralized exchanges and automated market makers (AMMs) in exchange for rewards or yields. The lesson outlines how Bybit, a leading cryptocurrency exchange, enables its users to engage in this rewarding practice. The primary argument here is that liquidity mining is not just a buzzword; it’s a compelling way to earn passive income within the crypto landscape.
Liquidity mining allows participants to contribute their assets to liquidity pools used by traders on the platform. As articulated, “traders pay fees, and with DeFi or these automated market makers, you or me can actually add our tokens in.” This fee mechanism generates yield for providers. In Bybit’s case, the platform’s success correlates to the trading volumes it handles, which dictates the attractiveness of APYs (Annual Percentage Yields) offered to liquidity providers.
To participate in liquidity mining on Bybit, follow these straightforward steps, carefully laid out for your convenience:
The outlined steps are crucial in making informed decisions that can maximize your returns while managing risk appropriately.
Passive Income Generation: The allure of earning yields simply by provisioning capital cannot be overstated. The video emphasizes how effective liquidity mining can be, especially relevant in the context of low-interest environments for traditional assets.
Automated Market Makers (AMMs): The lesson brings attention to AMMs as empowering platforms powered by blockchain. It’s enlightening to understand how these market makers democratize access to liquidity provision, allowing even novice traders to participate easily.
Transparent Dynamics: The transparent fee structures of decentralized exchanges are beneficial. Liquidity providers appreciate knowing how trading volumes directly influence their returns, fostering a degree of control over their income potential.
Withdrawal Flexibility: An important consideration discussed is the ease of claiming yield without incurring gas fees—a significant advantage in the crypto space where transaction costs can be prohibitively high.
However, it is vital to acknowledge some limitations of the liquidity mining concept:
Volatility Risks: The risks associated with market fluctuations are present. Market volatility can affect your investment’s value in ways you may not have anticipated, particularly if you’re holding volatile trading pairs.
Impermanent Loss: The reality of impermanent loss is significant. When prices fluctuate, your held assets might be worth less if you withdraw them from liquidity pools. You must weigh your potential gains from liquidity mining against the risks of impermanent loss.
These complexities require careful consideration, particularly for new investors, necessitating further education and research.
Liquidity mining is intrinsically linked to the overall cryptocurrency ecosystem and various DeFi projects. AMMs like Uniswap and PancakeSwap paved the way for liquidity mining’s advent, demonstrating how trading fees can be shared equitably among providers. What’s particularly interesting is how liquidity mining enhances price discovery for assets on decentralized platforms, serving as a critical component in pooling capital to facilitate trades seamlessly.
In the realm of DeFi, liquidity pools create opportunities for exposure to yields that were previously unfathomable within traditional finance. For instance, platforms like Curve Finance optimize stablecoin trades through efficient liquidity mining, illustrating practical applications of the concepts discussed in this lesson.
The growing trend of liquidity mining may significantly shape the future of finance. As these decentralized financial systems gain traction, more investors might migrate from traditional banking systems in search of higher returns, potentially bubbling into mainstream adoption.
Furthermore, societies experiencing financial inequities might find themselves empowered through open-access platforms that liquidity mining offers, allowing anyone with crypto assets to engage and earn. The ramifications are profound: if DeFi continues to mature and bridge the gap between traditional finance and blockchain, we may witness an entirely new financial landscape.
Having navigated various investment opportunities within the crypto ecosystem, I find liquidity mining particularly fascinating. It is an excellent way for individuals to become more engaged with the underlying mechanics of financial markets while benefiting from passive income. Nevertheless, one must remain cautious—the allure of high APYs should be tempered with an understanding of the associated risks and market dynamics.
In my experience, the best strategy lies in ongoing education and remaining abreast of the latest trends. The realm of cryptocurrency and DeFi is continually evolving, and asserting oneself as an informed participant is a key asset in mitigating risks and maximizing potential rewards.
In summary, liquidity mining opens the door to exciting opportunities for passive income within the growing DeFi landscape. With potential to simultaneously earn trading fees while enhancing market liquidity, you now have the tools to engage with this emerging financial practice confidently.
As the world continuously transitions towards decentralized finance, understanding such mechanisms will not only help you capitalize on current trends but also prepare you for the innovative future of finance—especially within cryptocurrencies.
Liquidity mining has emerged as an important concept in both traditional finance and the innovative cryptocurrency landscape, particularly within decentralized finance (DeFi). It allows participants to earn yields through providing liquidity to trading pairs on automated market makers (AMMs). By understanding how liquidity mining works, you can capitalize on trading fees generated by your contributions. This lesson will demystify liquidity mining, exploring its mechanics, implications in the crypto world, and how it connects to traditional financial principles.
Liquidity Mining
Liquidity mining refers to the process where individuals provide liquidity (in the form of cryptocurrency) to a liquidity pool on decentralized exchanges (DEXs) or AMMs. In return, they earn yields based on trading fees. In traditional finance, liquidity is crucial for facilitating transactions and ensuring smooth market operations.
Automated Market Maker (AMM)
An AMM is a type of DEX that utilizes algorithms to determine asset prices and facilitate trades without relying on order books. In traditional finance, this is akin to market makers that provide liquidity by continuously offering buy and sell prices for assets.
Annual Percentage Yield (APY)
The APY expresses the annual return on an investment, factoring in compounding over time. In both traditional finance and crypto, APY is an important metric to assess the profitability of investments, particularly in liquidity pools where returns may fluctuate based on trading volumes.
Impermanent Loss
Impermanent loss occurs when the value of your assets in a liquidity pool decreases compared to holding them in a wallet. This concept is crucial in both traditional and crypto worlds, as it helps investors understand potential risks associated with providing liquidity.
Trading Fees
Trading fees are charges accrued during transactions on exchanges. In a typical exchange, these fees benefit the platform, whereas with AMMs, they are distributed among liquidity providers, effectively giving them rewards for their contributions.
Liquidity Pools
Liquidity pools are collections of funds locked in smart contracts that facilitate trading on DEXs and AMMs. These pools function similarly to mutual funds in traditional finance, where multiple investors contribute assets to create a collective investment vehicle.
Leverage
Leverage allows traders to amplify their positions in the market, potentially increasing returns but also risk exposure. In crypto, this becomes particularly relevant in liquidity mining, as utilizing leverage can heighten both rewards and risks, leading to significant financial implications.
Understanding these concepts provides a foundation for navigating the ever-evolving crypto landscape, while linking them to traditional finance highlights the broader mechanisms of market behavior.
Detailed Explanation
Liquidity mining allows individuals like you to earn yields by contributing assets to liquidity pools. The key to earning lies in understanding that as traders buy and sell assets, fees are generated that eventually return to you as a liquidity provider. By examining the yields available for major cryptocurrencies such as Bitcoin and Ethereum, you can make informed decisions about which pools to contribute to based on historical trading volumes.
Detailed Explanation
When adding liquidity, you need to select a trading pair that generates good trading volumes – this often correlates with higher APYs. Once you’ve identified a pair (for instance, Bitcoin and USDT), you must transfer your assets and ensure you provide them in the correct ratio. This process is similar to contributing to a traditional investment fund, where you must meet specific investment thresholds and guidelines.
Detailed Explanation
When engaging with liquidity pools, some platforms like Bybit enable you to use leverage to potentially increase your returns. However, it’s essential to tread carefully, as increased leverage also brings greater risk of liquidation. Keeping an eye on your liquidation price is essential to manage your risk exposure effectively, much like how panicking about margin calls can happen in traditional investing.
Detailed Explanation
Claiming your earned yields is a straightforward process, particularly on platforms that minimize gas fees. However, the impact of impermanent loss must factor into your overall profitability. If the price of the underlying assets changes significantly, it could affect your returns. Just like in traditional investing, where fluctuations impact your portfolio, recognizing and quantifying these shifts is vital in navigating the crypto landscape.
In the real world, liquidity mining mirrors several aspects of traditional finance, resembling both investment funds that seek to provide liquidity and offer returns based on collective performance. For example, think about a mutual fund where your return is based not only on the performance of the markets but also on the fees collected from traders utilizing those investment tools. By understanding liquidity mining, you can apply the same principles to cryptocurrency investments, laying the groundwork for sound investment strategies.
In liquidity mining, an increase in trading volume directly impacts the earnings of liquidity providers. As trading activity rises, fee revenues grow, leading to higher yields. Conversely, decreased activity results in lesser returns, potentially leading to reductions in APY. This relationship mirrors traditional finance, where trading volumes on stock exchanges influence the liquidity and price volatility of securities.
While there are many benefits to liquidity mining, it does come with its share of challenges:
However, blockchain solutions like automated fee management and real-time analytics can mitigate some challenges. Educating yourself about the mechanisms at play reduces the complexity and enhances your crypto adventure.
Liquidity Mining is a Rewarding Opportunity: By providing liquidity to pools, you can earn substantial yields.
AMMs Revolutionize Trading: These platforms provide decentralized trading without traditional order books.
Understand APY Fluctuations: Keep watch of changing APYs that rely heavily on market volumes.
Manage Impermanent Loss: Consider impermanent loss carefully as it can affect your final returns.
Leverage Increases Risk: While leverage can amplify returns, it also heightens potential liquidation risks.
Monitoring is Key: Keeping track of your positions and market trends will provide better decision-making capabilities.
Educate Continually: As the crypto world evolves, so too should your knowledge and strategies.
By grasping these concepts and their applications, you’re setting yourself up for success in the fascinating intersection of traditional finance and the innovative world of cryptocurrency. Remember, the learning never stops!
Vulnerabilities exist: Impermanent Loss
This phenomenon refers to the potential losses incurred when the prices of tokens you have deposited diverge significantly compared to simply holding the tokens in your wallet. It’s a risk that liquidity providers must understand completely.
When was the last time you watched your bank account grow while sipping coffee at home? Or perhaps you’d like to earn a full-time income without the nine-to-five grind? Today’s lesson will guide you into the world of liquidity mining within decentralized finance (DeFi), where earning money can feel as easy as clicking a button. This is not just a trend; it’s a revolution in how we interact with our assets, especially amid rising cryptocurrency adoption.
In this lesson, you’ll discover:
Mechanics of Profit in Liquidity Mining
At the heart of this lesson lies the process of liquidity mining, an exciting opportunity that lets you earn passive income on your cryptocurrency assets. What’s the secret? It all starts with decentralized exchanges (DEXs) such as Uniswap, Orca, and PancakeSwap, platforms that enable you, the liquidity provider, to deposit your assets into liquidity pools. Here, traders can execute trades, and the fees generated from those trades are redistributed to you as a reward for providing liquidity.
The lesson asserts a compelling argument: by participating in liquidity mining, you aren’t just holding onto assets; you’re actively working to generate income. The key takeaway is the understanding of how traders swap assets (e.g., Ethereum for USDC) and how you, as a liquidity provider, are compensated through fees—typically around 0.3% for each trade. Moreover, it’s crucial to recognize potential risks like impermanent loss that could affect your portfolio, alongside the opportunity to yield significant returns, especially during our bullish phases.
Understanding the Mechanics:
Providing Liquidity:
Selecting Pools:
Assessing Risks:
Using Performance Metrics:
Building a Diversified Portfolio:
Monitoring and Adjustment:
The allure of liquidity mining lies in its capacity to allow individuals to earn a passive income from their currently idle assets. Let’s delve into some essential strengths of this approach:
Passive Income Potential: The idea of earning returns on initially dormant assets is compelling. As outlined in this lesson, liquidity providers earn from trading fees simply by locking their assets in liquidity pools. The fact that typical fee payouts hover around 0.3% from trades reflects a tangible financial incentive.
Flexibility and Control: The ability to provide liquidity without the constraints of lock-up periods is a major strength. You maintain control of your assets and can withdraw them whenever it benefits you, unlike traditional financial products that often impose lengthy bills for access.
Access to Diverse Opportunities: Options like Uniswap, PancakeSwap, and Orca significantly diversify your potential investment avenues. Specific pools can offer APYs ranging from moderate to high, further maximizing your returns based on the risk you’re willing to handle.
Engagement with Emerging Trends: As institutional money flows into cryptocurrency markets, the liquidity revolution creates novel avenues for participation. Investors now have the opportunity to engage in emerging technologies and trends surrounding cryptocurrencies, thus positioning themselves favorably for future growth.
However, certain vulnerabilities exist:
Impermanent Loss: This phenomenon refers to the potential losses incurred when the prices of tokens you have deposited diverge significantly compared to simply holding the tokens in your wallet. It’s a risk that liquidity providers must understand completely.
Volatility Risks: Especially as more capital floods DeFi, these high returns may encourage risky assets and tokens, heightening the chances of loss.
The concepts explored in this lesson mesh seamlessly with the growing landscape of cryptocurrencies and blockchain technology. The emergence of platforms that facilitate liquidity mining continues to attract both retail and institutional traders, demonstrating the disruptive nature of decentralized finance.
For instance, the deployment of DeFi protocols on networks like Ethereum, Solana, and BNB Chain highlights a competitive environment where liquidity provision becomes an essential service. By employing liquidity pools, traders exchange capital directly without intermediaries, which further enhances market efficiency—a prime virtue of decentralized systems.
Specific projects, such as Curve Finance, offer stablecoin liquidity pools, encouraging stable returns by mitigating volatility risks—an example of newer platforms catering to different investor appetites. The acknowledgement of DeFi’s impact on traditional finance further contributes to broader adoption, creating an ecosystem where liquidity services thrive.
Envision how the dynamics of liquidity mining may transform the landscape of finance as we know it. As we gravitate towards a more decentralized economy, traditional models of income generation may be under siege. Liquidity mining, through its promise of passive income and increased yield, presents a strong alternative, transforming one’s approach to investing.
The societal ramifications could be substantial; amid an economic climate where conventional avenues may offer diminishing returns, DeFi emerges as an attractive solution for income diversification and financial empowerment. Individuals can create revenue streams previously reserved only for established financial institutions.
Moreover, as developments in blockchain technology unfold, we can anticipate an even richer tapestry of investment opportunities, where innovative services such as DeFi hybrids could redefine capital management. There will potentially be increased access to liquidity and perhaps even integration with traditional finance platforms, blurring the lines between worlds.
From working in the financial technology sector, I have seen first-hand how decentralized finance is shifting paradigms. It amazes me to see individuals now harnessing their assets’ potential through liquidity mining. This model compels one to reconsider the typical “hold and pray” strategy many crypto enthusiasts cling to.
Liquidity mining embodies the ethos of proactive asset management, offering not merely speculative trading but an opportunity for genuine participation in the market. It encourages not just engagement with one’s portfolio but also fosters a deeper understanding of asset behavior and trading dynamics.
In a world where time is money, why not let your crypto do the work for you? The beauty of this approach is not just in the returns; it offers a sense of autonomy within the financial system, allowing you to build your income on your terms.
In conclusion, liquidity mining opens the door to numerous opportunities for you to generate income while sitting back and managing your assets effectively. The potential returns are enticing, and the tools available empower you to make informed choices. As we embrace this decentralized wave in finance, remember: understanding the risks and leveraging the rewards may well position you for financial success.
The future of liquidity mining looks bright, and the capacity for transformation is immense. It’s a chance to redefine financial freedom within the revolutionary context of cryptocurrencies and blockchain technology.
Quotes:
In today’s interconnected financial landscape, liquidity mining has emerged as a significant avenue for generating income in decentralized finance (DeFi). By leveraging platforms like Uniswap, PancakeSwap, and Orca, you can convert dormant cryptocurrency assets into a compelling source of passive income. This lesson dives deep into the mechanics of liquidity pools, the role of liquidity providers, and the intricate dance between traders and smart contracts, illuminating the relevance of these concepts not just in the DeFi domain but also in traditional financial frameworks.
Liquidity Mining
Liquidity Pools
Automated Market Maker (AMM)
Divergence Loss
Transaction Fees
Total Value Locked (TVL)
Decentralized Exchanges (DEXs)
Hypothetical Example 1: If you contribute $10,000 in ETH and $10,000 in USDC to a liquidity pool, your return may fluctuate based on the market value and trading volume of both assets, with a potential divergence loss if the price changes significantly.
Hypothetical Example 2: Participating in a trading pool with a projected 80% APR could significantly outperform similar investments in traditional stock assets, providing you a substantial revenue stream as long as careful monitoring and adjustments are made.
Historically, liquidity mining opened avenues for passive income that traditional finance often relegated to large institutional players. By actively managing portfolios through decentralized networks, you’re likely to engage with capital flows like never before, capturing both regular fee income and rewards in the form of governance tokens, which can further compound earnings through staking opportunities.
The relationship between liquidity providers and traders is reciprocal; as more liquidity enters the market, trading volume often increases, pushing transaction fees higher, thus incentivizing greater liquidity provisioning. Conversely, in times of low trading volume or capital flight, liquidity providers may see diminished returns—a crucial dynamic to understand for crypto market participants.
Understanding these key concepts deepens your knowledge of both traditional finance and the innovative realm of cryptocurrencies, setting you on a path toward effective engagement in DeFi.
Continue to Next Lesson: You’ve laid down the foundational knowledge of liquidity mining—let’s build on that in the next part of your Crypto Is FIRE (CFIRE) training program, where we deepen your understanding of risk management and portfolio strategies within the DeFi space!
How to Make a Full Time Income Liquidity Mining in DeFi
Transcript:
In today’s video, I’m going to be showing you exactly how you can make a full-time income through liquidity mining and decentralized finance. We are going to be using platforms like Uniswap, platforms like Orca, as well as platforms like PancakeSwap today. These three platforms are all decentralized exchanges.
A decentralized exchange is where liquidity providers can come and earn income on their cryptocurrency assets that they might already be holding in their wallet, and then traders can come to this decentralized exchange and execute trades as if they wanted to trade on a centralized exchange, but it’s directly through their wallet and it’s decentralized and it’s cheaper fees.
With that being said, I want to talk about the process of liquidity mining real quick, so that way we can understand exactly what we are doing here and what the risks are. Whenever we are liquidity mining, there are three different different parties one of them is an automated smart contract which is known as the liquidity pool and then we also have the liquidity provider which is people like us that want to earn passive income through liquidity mining and then there is also going to be the trader the trader is the person that is making us the money we are providing
a service to this trader something known as liquidity as a service or last basically that’s what liquidity mining falls under but essentially the trader will come in here and swap one asset for another asset so if they want to trade let’s just say aetherium for USDC basically meaning that they want to sell their theory and they are going to end up putting aetherium in the smart contract and taking USDC out of the smart contract but where does that money come from where does the USDC that they are taking out of the smart contract and taking usdc out of the smart contract but where does that money come from where does the usdc that they are taking out of the smart contract come from where does the ethereum
that they are putting in the smart contract go to that goes to the liquidity providers and comes from the liquidity providers liquidity providers are putting both assets in a liquidity pool so as a liquidity provider we are going to put both ethereum and usdc in this liquidity pool and we are parking our capital in this smart contract whereas traders when they execute a trade it instantly happens it’s not like they’re parking it for a period of time liquidity providers park their capital for as long as they want or as short
as they want there’s no lockup period in this smart contract now with that being said i want to dive a little bit deeper let’s just say as a liquidity provider we start with ten thousand dollars of ethereum and ten thousand dollars of USDC. So 50-50 weight on our assets where we just have an equal split.
Well, guess what? If a $1,000 Ethereum trade comes in, we are going to have a little bit more Ethereum. So we might have 11,000 and then we will have a little bit less USDC and we might have 9,000 over here because our portfolio is rebalancing. But the thing is there can be divergence loss. We might start with, let’s just say $20,000.
But the thing is, as the price moves with let’s just say $20,000 but the thing is as the price moves up yes our $20,000 will make a little bit money it might go to 21 or 22 and so on and so forth the thing is we are being sold out of aetherium our aetherium is being shifted into USDC why because people are buying aetherium which is the reason why it’s going up and they are giving us USDC and on the downside what’s gonna happen the opposite we’re gonna be sold out of USDC. And on the downside, what’s going to happen the opposite.
We’re going to be sold out of USDC into Ethereum because people are selling their Ethereum to us. We are taking on exposure to it. That’s exactly how liquidity mining works. Now, the fee that we are being paid comes from this input of the trade right over here. So that’s going to go right over here to liquidity providers.
Typically, that is around 0.3% on average for different liquidity pairs. Now, this example is just Ethereum to USDC. There are obviously like crypto slash stablecoin liquidity pools where you can pair something like ethereum with a stable coin or wrapped bitcoin with the stable coin stuff like that there are also going to be crypto to crypto pairs where they are more correlated because both assets move in the same direction or maybe sometimes they don’t move in the same direction that’s what we’re diving into
today now looking over at uni swap it’s a pretty simple interface for trading if we want to execute a trade we just say hey we want to trade ethereum for usdc we type in the amount of ethereum that we want to trade just like that and then we would hit get started and it would allow us to execute our trade as a liquidity provider we can very easily provide liquidity we just go over here to new position we go over here to select pair select assets let’s just say i want to do ethereum to fet right i go over here to new position. We go over here to select pair, select assets. Let’s just say I want to do Ethereum to FET, right?
I go over here and I select the fee tier. I put in my low and high price, and then I put in my deposit amounts, and then I can deploy my capital into this pool. Very, very quick process. But the thing is, what exactly is a low price? What exactly is a fee tier? How are these deposit amounts determined? That’s where confusion comes into play.
And don’t even get me started on what is the return that we could get from uniswap because we Have no idea because we are blindly deploying into this pool That’s where we use tools like metrics finance metrics finance allows us to actually simulate the results for these liquidity pools and see actual Performance before deploying into them as opposed to after deploying into them now metrics finance is laid out in a very easy to use manner Discover is simply for finding the pools. Simulate is after you found a pool and you’re looking to dive deeper into the results to
see actual performance. Build is after you simulated performance and you’ve determined that you want to include that one in your portfolio. You just add up all the positions you plan on deploying into build and it kind of shows you the overall returns for that portfolio.
And then track comes time when you want to actually track your position performance. So we’re going to start in the discover page i’m going to be using uni swap pancake swap in orca these are three platforms that i actually have capital in you can see i have two positions over here over thirty thousand dollars in uni swap right now over here on orca i currently have about six thousand dollars in this pool and on pancake swap i don’t have any capital in it at the moment but i have had capital and pancake swap in the past and it was actually the first
d5 platform that i invested into four years ago when i got into this industry now that being said we are going to select a couple different networks too because uni swap has the majority of its tvl on the ethereum network i know a lot of people say that ethereum is dead but where is d5 d5 is on the ethereum network ethereum has the largest amount of tvl in decentralized finance where do institutions want to park their money? On the Ethereum network. They don’t want to go to other chains. It is too risky for them. Therefore,
by providing liquidity on the Ethereum network, we are capturing that institutional volume. And the next thing that we can do is go over to PancakeSwap on the BNB chain, because that’s where PancakeSwap is most prominent. And of course, Orca is on the Solana network, and they just recently deployed on the Eclipse network.
And if you guys want me to make a video on that, make sure to drop a like, subscribe when notifications turned on, and let me know down below in the comment section and I’ll happily make some content on it. Anyways, now that we’ve done that, we need to start filtering through these 797 different pools that we find.
The first thing that I am going to do is filter fees APR, where you’re going to do higher than 20%, lower than a thousand percent. Reason why is because typically stuff that is above a thousand percent is going to be pretty risky. If you really want to narrow it down, you could do lower than 500% because again, the stuff that is at 500% is going to be very, very risky or of course be data glitches when we pull the data directly from the blockchain.
As far as TVL goes, typically I like to start with higher than $1 million and then I like to do lower than $10 million. This allows me to find pools that have a high amount of TVL, not too much tbl right and then of course if i can’t find a good selection of pools then i will lower that tbl requirement i just have to be careful when i am lowering that tbl requirement and from here we have 203 different pools to sort through the next thing i’d like to do is just go to the middle page and the reason why is because we need to cut this list in half so i’m going over
here to page 10 because we have about 21 different pages and then what i’m going to go ahead and do is sort by the highest fees to tvl ratio so we see the highest first and we see the lowest last the reason why is because i want to find the middle ground the middle ground over here is about 0.027 and if we just filter higher than 0.
027 that’s going to show us pools that are actively traded and instantly cut that list in half now off the bat we have a couple different opportunities on the home page which is great right but we have to make sure that these are actual opportunities that we want to deploy into we want to make sure that there are real businesses behind these opportunities we do not want to deploy into random meme coins I know that a again has a huge platform behind it billions of dollars in TV on talking I’m gonna favorite it but a consideration about this one is it could potentially be very, very volatile,
considering Agin was an airdrop token. It’s also Render to Sol doing a 92% APR. It’s not bad whatsoever. Ethereum to SafeToken. Once again, we want to see how SafeToken actually ties into the ecosystem of the platform behind it. We have Ethereum to Tau, and we also have Jito Sol to Drift. These are all good opportunities.
Now, for this example, I’m just going to be looking at five different pools and for the record i personally think that five different pools is a great start for a portfolio i personally don’t run more than five pools and the reason why is because i would rather have five really really good pools that i’ve thought out i’ve researched and i can fully put my mind behind but as opposed to having 20 different pools that I fractionalize my time on and not spend as much time researching and then end up getting burned
or getting completely killed by divergence loss. Guys, if you wanna learn how you can stop just hodling cryptocurrency in your wallet and you can start deploying that in DeFi liquidity pools, I created something that is only $30 called DeFi XL. Give you a structured learning path for getting deployed your first positions in DeFi.
We have an expert community behind us so you can get support whenever you need it. We host weekly workshops. The one that we’re hosting this week is exposing my DeFi hybrid model so I can maximize my returns this bull market. That’s definitely one to be there for. And then of course, you’re getting 30 days free of Metrics Pro because of the partnership between Builder Wealth and Metrics Pro.
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And we just launched this about a month ago and we already have over 200 plus members. Now, that being said, now that we found these different liquidity pools, again, I’m going to start to simulate their performance because simulate is now that we’ve determined, hey, we want to look into this pool and we’re going to start to look into it through the simulate page.
So the first thing I’m going to look at is correlation. This one is a negative correlation, meaning that they don’t really have any correlation. Additionally, if we look at how many Agin tokens equal one ETH, if we look at this price chart over here, and if you don’t know what I’m doing right here, definitely check out DeFi XL.
You’ll notice that the price chart is trending up, which most of us are familiar with. Oh, up is good, down is bad. In this example, up or down could mean good or bad, which I know that sounds confusing, but we’re looking at how many Agin tokens equal one ETH. So logically, whenever the price is going up, more Agin tokens equaling one ETH means that ETH is outperforming Agin, basically.
That could mean that both are going down but aegon is going down more right these are a couple different examples as well as the volume history has came to a huge halt as you can see it started super super high over here and then it just completely declined i don’t want to deploy into this pool so i’m just going to go ahead and take it off of my favorites list next thing i’m going to look at is the render to sole position now for reference i’m considering a full-time income, something like $60,000 per year,
and I’m going to be targeting about 100% APR, which means that $60,000 is probably going to be required to get a full-time income out of decentralized finance. Now, I’d personally be comfortable allocating something like $25,000 to render to sole if it is keeping up with these returns at roughly 92% APR, as well as because it’s up there in the market cap rankings. Now again, these ones have a negative correlation.
That doesn’t mean that we can’t deploy into it, but that rather means that we have to be careful and we have to have broader ranges when we are deploying. Now the reason why it has a negative correlation is because recently SOL has just been completely crushing it and it’s been leaving all the altcoins paired with it in the dust basically. I’m going to put my max price at 42.
5 and i’m going to put my min price at 28 that would weight me about 60 percent render in case we see a turnaround at least that’s what i’m expecting and about 40 soul in the position the next thing i’m going to do is look at the volume history this is the amount of volume that’s being factored into our simulation right but the thing is we have days over here that are outliers i guess you you could say. It’s super high over here.
It’s also trending downwards. We wanna look at the past five, six days of volume. So we change that calculation range to six days. And just like that, we’re getting a 48% APR. But once again, when we’re looking at six days, even 14 days, we have a different correlation number. Seven days is gonna give us a 60% correlation.
So that tells us over the past week, we’ve been way more correlated, which means that we can tighten up on this range. We could do something like 38.5. And then over here, we can move this min price up to something like 31.8. That’s going to keep us at 60% render, 40% sole, but we are now getting a 115% APR. And that seems pretty consistent.
We are going to hit save to portfolio. That’s where it goes over the build section. Now, again, I’m not going to dive into the rest of these I’m gonna go through the process on my own and then come back to you in the build tab now off of the three pools that I chose which I did not include the safe one on this list we are currently doing $200 per day off of $60,000 we are doing over 10% per month which keep in mind that’s primarily because of this render pool doing super well over the past seven days but that can change this jito sold a drift position also doing super well remember we have
exposure to underlying assets i think that jito soul which is a derivative of soul is fine drift on the other hand is an asset that’s behind a platform you have to make sure that you’re willing to take on that exposure because you do have full market exposure in these instances but when we look at yearly income we’re actually making 75 000 per year off of these positions, off of $60,000, assuming we can keep up with these APRs.
But the thing is, as institutional money moves in over the next couple of years, these returns are going to start to go down. We might be able to get these returns, but we are most definitely going to have to take higher risk. And the reason why is because there’s more capital in the market. So now is the time to stop hodbling in the crypto market and to start deploying your assets into liquidity pools and start liquidity mining and doing liquidity as a Service because you need to start earning income so you could take that income inject it into your own hybrid model or inject it into
Your hodl portfolio something like that and build up your portfolio and let it compound on its own again That’s exactly what we do in DeFi Excel. Foundation building, strategy development, and practical application so you can get deployed. I hope you enjoyed today’s video. If you did, drop a like, subscribe, notifications turned on, and I will see you guys in the next one.
