Guide to Crypto Farming (part 1)

all articles may be updated with time

Introduction to liquidity pools and farming

So the solution is to bring enough amount of both sides of the trade into the market so both merchant and consumer can do their trade, this is called, liquidity

If one token of the pool goes up in price it’s supply decreases on the pool and I can get less value than someone who was holding both tokens, this is called IL (impermanent loss)

In traditional CEX the fees are just earned by the exchange, in DEX is shared across all liquidity providers, it’s a more fair distribution of wealth which is aligned with the defi paradigm (decentralized finance)

The longer you pool the higher the fees and less chances to enter into IL

Liquidity pool is a passive income vehicle that is worth only on long term

You need to be careful with the APY % when investing on a farm, as you will receive the rewards on a token that can change price (decreasing the daily income)

Conclusions

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