About liquidity pool of crypto..

[Dorjoy12 8962]

Today  i am going to discussion  about liquidity  pool in my topic as it important  to know for every  crypto member ..    Those member  who work in crypto  world may heard about mining..  Still here has lot of members  who has  enough  idea about mining and some of them has basic  idea and its okay.. Usually those members  who do mining called minors.. For this, Minors receive commissions or earnings from transaction fees...  To do mining we all must need to have good computer  and ofcourse low cost electricity is required... Because usually  those device  that get used for mining need huge voltage  of electricity and its means the cost will be  huge ...  So if the earning comes from mining goes to the cost of electricity then there is no benefit in mining for us.. Again in many  country mining is not legal anymore..  That is why  its not possible  for every  one to earn from mining.. 

 

After read this  short discussion  of mining you can easily think what is the matter of liquidity pool with  mining,right? 
 So here  explain  it shortly about how to use liquidity  pool?? Because i am going to do discussion  about  it..
If you understand this discussion, you also can get a taste of mining by try this method.  Its means that you can earn something similar to the way miners earn from transaction fees everytime..  

 

At present, there are many decentralized exchanges, especially Uniswap.  Because only they were the first to use the logic of Liquidity Pool in the right way...  Also Justswap or centralized  exchange  such as  Binance has the facilities too  of  Liquidity  pool.. 

 Uniswap has two features, one is  which  "Swap" and another  is "Pool".. But you can be a liquidity  pool provider by use second feature  of Uniswap.. By this way we can earn something  from transaction  fees..  Which  means  you will get some taste of mining without doing  mining....

 

What is liquidity  pool??? 
 If you want to know about liquidity  pool shortly  then  its easy to  say this is a method where token get locked in smart contract every time..  ....  While those tokens provide liquidity for trading... This matter can be lil bit complicated for all of us but after proper discussion  hope  everyone  will  understand .. 
Why need liquidity  pool??
 We are well-known  with centralized  exchange  site such as Binance , Kucoin and coinbase..  In this kind of exchange  site you can see a order book..  There one side  has buyer order and another  side has seller order..  As we know, buyer always want to buy with low rate  but seller Always  want to sell with high rate..  Now suppose one buyer want to buy some BNB from Binance  exchange  site..  In the same time  one seller want to sell some BNB in Binance  exchange  site.. Now buyer want to buy per BNB by 25 usd but seller want to sell per BNB by 28 usd.. Now if the buyer changes his decision and his purchase price changes from 25 to 26.5 and the seller changes his decision to 26.5, then that word will be fulfilled... 

 But if the buyer and seller dont want to change their decision  then  that time what will happen  with market position ??  For this reason market maker come into market..  Then the market maker  give them  different  price according  to their choice..  Its means market  maker provide  them liquidation..  For this liquidation  provide no buyer or seller need to wait in market to buy or sell their coin..  Thus market become active always .. You must have seen that there are many exchanges where you have to sit with buy order or sale order for a long time... And it happen because  there has no good liquidity provider in those exchanges..

 

How to use liquidity  pool??
Hopefully, you have got some idea of what Liquidity Pool is.  Now let's try to know how to earn using this Liquidity Pool... In centralized  exchange  like Binance  or decentralized exchange  like Justswap  has the feature  of liquidity  pool... You also can be a liquidity  provider by using  their feature  and thus you can earn something .... Again if you swap or exchange tokens from Uniswap then you need to  pay a fee to complete the swap...And some of the fees you pay are paid to those who provide liquidity... Suppose you have an ETH and some ZRX tokens... Then if  you want, you can become a liquidity provider with these two coins...
Again imagine you have 1 eth that price  is now  350 usd and now if you want to keep this one eth in liquidity  pool but you also need  the same amounts  of another  coin that you want to keep in liquidity  pool.. Like you want to keep ZRX then you also need to have 350 usd ZRX..  Its means the pair  amount need to be same.. So i imagine  you keep one eth and 900 ZRX which total amount is 700 usd.. Now if someone wants to sell some ETH and take some ZRX, then   from your 900 ZRX he will be given ZRX as per his demand and instead ETH will be credited to your pool account... According to this calculation, the amount of ETH in your account will increase, since he sold ETH and took ZRX.  On the other hand, the amount of ZRX will be reduced...  Thus you will be given some part of the fee that will be deducted from the user while doing this swap...

 

Is liquidity  pool for you??
If you want to hold a coin for long term then liquidation  pool isnt for you.. Because if you want to hold ZRX for a long time and if you leave ZRX in Liquidity Pool while  the amount of ZRX decreases then in this direction the price of ZRX increases.  But the price of ETH does not increase in that proportion and thus here your loss will be as USD... For this reason you shouldnt use liquidity  pool.. And if its  no matter for you to  hold ETH or a ZRX hold then you can take part in the Liquidity Pool... Thus you can get a taste of mining with the Liquidity Pool part.. . you can take commission from the transaction fee...

 

Best of luck cryptotalk members 💕  

Edited October 26, 2020 by Dorjoy12

[Babubu609 0]

@Dorjoy12 this is very informative this is very important for newbies....many members lacks knowledge regarding liquidity pool of crypto. It will be nice 🙂 if everyone 

[Dorjoy12 8962]

16 minutes ago, Babubu609 said:

@Dorjoy12 this is very informative this is very important for newbies....many members lacks knowledge regarding liquidity pool of crypto. It will be nice 🙂 if everyone 

Thanks for your support bro.. I was thinking about to post it as i know lot of members has the confusion about liquidity pool.. In one words liquidity pool feature is alternative feature of mining from where we can feel the taste of mining without the cost of mining and so on..  @Babubu609               

[Babubu609 0]

11 minutes ago, Dorjoy12 said:

In one words liquidity pool feature is alternative feature of mining from where we can feel the taste of mining without the cost of mining and so on..

That is absolutely correct my friend 😌 I am sure many members that read your topics will surely like it because it is so helpful especially to those willing to start mining.

[DennisChannels 238]

My kudos to this post, @Dorjoy12

 

This is really interesting (not for dummies, I'm afraid, I had to read it twice to get the whole picture in detail) and yes, I'm using liquidity pools; I'm studying right now so I have no time for trading seriously, it's a good moment to leave the things growing... and now I understand much better why I get some profit from these pools.

 

Actually, there is a potential risk: the value of the pair. When we place the coin in the pool and we put the same value of the paired token, we acquire it at the market price. If, while passively earning from the pool, that token drops hard, you will lose a great part of the initial investment. But hey, no pain, no gain 😄

 

Cheers!

[Dorjoy12 8962]

13 hours ago, DennisChannels said:

Actually, there is a potential risk: the value of the pair. When we place the coin in the pool and we put the same value of the paired token, we acquire it at the market price. If, while passively earning from the pool, that token drops hard, you will lose a great part of the initial investment. But hey, no pain, no gain 😄

@DennisChannels so that we must need to avoid those pair of crypto currrency   that has low trading    volume as our earning in liquidity pool depending on pair trading volume..  I have mentioned ETH and ZRX pair but i dont think this pair has much trading volume so it will be best if we out in liquidity pool btc and eth pair.. 

 

14 hours ago, Babubu609 said:

so helpful especially to those willing to start mining

@Babubu609   ofcourse they will be more benefited as they have idea about mining cost plus risk too about lose money.. But in liquidity pool feature there has no risk like mining..             

[Babubu609 0]

@Dorjoy12In mining there are some requirements that need to be satisfied mate, like electricity and a city good miner that can make everything move perfectly without any doubt. Not getting this satisfied can lead to loose instead of gain. But all that you highlights are very good keep it up.

[Dorjoy12 8962]

9 minutes ago, Babubu609 said:

mining there are some requirements that need to be satisfied mate, like electricity and a city good miner that can make everything move perfectly without any doubt

@Babubu609  how it will be if the minor need much cost to do mining than the Commission he earn from mining, 😁  because you know well to do mining need good computer plus high voltage electricity that many electricity authorities dont permit.. Also its risky to do mining in those country where crypto is illegal...  So that liquidity pool is better than mining..         

[Dorjoy12 8962]

24 minutes ago, Mosharraf said:

@Dorjoy12,,,You have presented very good information, this information is useful for everyone in the crypto world, we all know that mining is expensive and mining does not make much money, mining requires electricity and a good computer, mining is similar to liquidity  pool,  But I want you to know how to do liquidity  pool and what will be the profit

@Mosharraf what you have said is true about  liquidity pool but i notice a thing that you quoted my whole topic which is not look good in a page or members will feel bored to scroll the page.. So whenever you quoted a post or topic then just quoted that part about Which you want to discussion.. Hope you understand the meaning of quoted..                    

[Dorjoy12 8962]

1 minute ago, eliottalderosn said:

I don't know the comission rates you get but I hope it really worth the time spent on it

@eliottalderosn as far as i know the Commission for per exchange is 0.003% bro.. And its enough profitable if you put a good pair like btc and eth.. Because the more exchange will occur then more your Commission will be.. I Just give that example.. You can see full details about it in online and here the basic knowledge..               

[Dorjoy12 8962]

1 hour ago, eliottalderosn said:

@Dorjoy12 if that's the case then yea it might be worth spending time for it.

Another thing is that you should do it in famous exchange platform so you can get as many commissions as possible.

 

I know that there many online sources that allow you to read much and in details but it just happened that you posted about it at the same time 🙂

 

@eliottalderosn yah i know we need to do liquidity pool feature in famous exchange site like Binance because there has lot of liquidity provider and Commission high too.. Also you can choice up kucoin or Uniswap exchange site.. So we need to focus on good pair and good exchange site..      

[Projectcrypto 4382]

3 hours ago, Dorjoy12 said:

@eliottalderosn yah i know we need to do liquidity pool feature in famous exchange site like Binance because there has lot of liquidity provider and Commission high too.. Also you can choice up kucoin or Uniswap exchange site.. So we need to focus on good pair and good exchange site..      

You are right mate because only by that we can earn good profit in the Cryptoworld and that is why i always choose to make use of binance exchanger because it has ot of good pairs which will give user good opportunity if he plans well.

[Syedbesharat 5423]

Quit interesting and good idea fir member where I start thinking to apply, I have computer which I used for gaming and now it's gonna use for this purpose. I don't have to carry to much burden. And earn good amount from uniswap.The topic is well explained and gives brief idea of pool. Where don't need big regs to become miner. 

Edited October 21, 2020 by Syedbesharat
Marged my post

[Babubu609 0]

On 10/21/2020 at 6:04 AM, Dorjoy12 said:

its risky to do mining in those country where crypto is illegal...  So that liquidity pool is better than mining.

I agree 💯 with you 😊 , nice to bring up this topic as another alternative to earn rather than mining. There is more advantage using the liquidity pool in countries that crypto is illegal.

[George10 9932]

@Dorjoy12  My dear friend this is wonderful topic you made about liquidity pool and more information about mining of crypto currency and many more,I have really found it to be helpful because I have gotten some more knowledge more especially about liquidity pools,I had no idea about it.

[Dorjoy12 8962]

7 minutes ago, George10 said:

@Dorjoy12  My dear friend this is wonderful topic you made about liquidity pool and more information about mining of crypto currency and many more,I have really found it to be helpful because I have gotten some more knowledge more especially about liquidity pools,I had no idea about it.

@George10 its normal that we dont know everything but we are here to share our knowledge with each other.. As i know lil bit About   liquidity     pool so i had Decided to make this topic so that many member who wanted to do mining then they will change their decision and will move to liquidity pool..       

[Cryptomint 433]

Post rated by me because it deserves the rating. And I really appreciate to this. Because it is giving a lot of knowledge to the members.

 

[Ridam 7455]

Great article and easy explanation about Liquidity pool brother. There arw many liquidity pools currently in the De-Fi space. Personally I am providing the liquidity in Tron Blockchain because of lower gas fee in that ecosystem. Justswap is like fork of Uniswap on Tron blockchain and I have left some of my money there in Usdt/jst pool. Though the number of transactions are small and profit is less but it's ok that my investment is in smart contract and the risk is pretty low.

 

[Shaza Ahmad 1682]

This is the most wonderful article I have read about liquidity pools, your explanation is accurate and wonderful and can be understood by the expert and the novice, I think that the liquidity pools have introduced a new concept of making money in crypto and the opportunity to make the market and earn money while keeping the favorite cryptocurrencies.

[Ahmad ah 1212]

It is very important for novice people who do not have enough information about the liquidity pool and who want to enter the field of mining and trading cryptocurrencies to read this information. It is very useful.
I think it will greatly help them to take the first step towards coding with the goal of getting rich.

[Razan alikac 1899]

Liquidity is important for all negotiable assets, including cryptocurrencies
 And it's a good way, different from mining and exchange, to make a profit
 And one of the main factors affecting liquidity in the cryptocurrency market is the trading rate

[Sykkuno 2887]

A liquidity pool is about DeFi as I remember, it is very different from the order books in exchanges and it is tokens that are locked in Defi protocols for lending purposes, but you said that this is not about the long term, which is exactly what DeFi is about since they offer yearly interest and most of the users are staking their tokens for long term. Also there is nothing called liquidation pool this is probably a honest mistake made there by accident.

[Dorjoy12 8962]

5 hours ago, Sykkuno said:

which is exactly what DeFi is about since they offer yearly interest and most of the users are staking their tokens for long term. Also there is nothing called liquidation pool this is probably a honest

 This is all about  depend  on a liquidity  provider  ownself because  if they  want to get huge reward then its normal to do long term liquidity  provide ..  You can take example  of eth 2.0 where liquidity  provider  even provide liquidity  for more than 2-3 years to get good reward..   Always  there has a thing work is reward @Sykkuno

[abd1992 960]

On 10/20/2020 at 3:48 AM, Dorjoy12 said:

Today  i am going to discussion  about liquidity  pool in my topic as it important  to know for every  crypto member ..    Those member  who work in crypto  world may heard about mining..  Still here has lot of members  who has  enough  idea about mining and some of them has basic  idea and its okay.. Usually those members  who do mining called minors.. For this, Minors receive commissions or earnings from transaction fees...  To do mining we all must need to have good computer  and ofcourse low cost electricity is required... Because usually  those device  that get used for mining need huge voltage  of electricity and its means the cost will be  huge ...  So if the earning comes from mining goes to the cost of electricity then there is no benefit in mining for us.. Again in many  country mining is not legal anymore..  That is why  its not possible  for every  one to earn from mining.. 

 

After read this  short discussion  of mining you can easily think what is the matter of liquidity pool with  mining,right? 
 So here  explain  it shortly about how to use liquidity  pool?? Because i am going to do discussion  about  it..
If you understand this discussion, you also can get a taste of mining by try this method.  Its means that you can earn something similar to the way miners earn from transaction fees everytime..  

 

At present, there are many decentralized exchanges, especially Uniswap.  Because only they were the first to use the logic of Liquidity Pool in the right way...  Also Justswap or centralized  exchange  such as  Binance has the facilities too  of  Liquidity  pool.. 

 Uniswap has two features, one is  which  "Swap" and another  is "Pool".. But you can be a liquidity  pool provider by use second feature  of Uniswap.. By this way we can earn something  from transaction  fees..  Which  means  you will get some taste of mining without doing  mining....

 

What is liquidity  pool??? 
 If you want to know about liquidity  pool shortly  then  its easy to  say this is a method where token get locked in smart contract every time..  ....  While those tokens provide liquidity for trading... This matter can be lil bit complicated for all of us but after proper discussion  hope  everyone  will  understand .. 
Why need liquidity  pool??
 We are well-known  with centralized  exchange  site such as Binance , Kucoin and coinbase..  In this kind of exchange  site you can see a order book..  There one side  has buyer order and another  side has seller order..  As we know, buyer always want to buy with low rate  but seller Always  want to sell with high rate..  Now suppose one buyer want to buy some BNB from Binance  exchange  site..  In the same time  one seller want to sell some BNB in Binance  exchange  site.. Now buyer want to buy per BNB by 25 usd but seller want to sell per BNB by 28 usd.. Now if the buyer changes his decision and his purchase price changes from 25 to 26.5 and the seller changes his decision to 26.5, then that word will be fulfilled... 

 But if the buyer and seller dont want to change their decision  then  that time what will happen  with market position ??  For this reason market maker come into market..  Then the market maker  give them  different  price according  to their choice..  Its means market  maker provide  them liquidation..  For this liquidation  provide no buyer or seller need to wait in market to buy or sell their coin..  Thus market become active always .. You must have seen that there are many exchanges where you have to sit with buy order or sale order for a long time... And it happen because  there has no good liquidity provider in those exchanges..

 

How to use liquidity  pool??
Hopefully, you have got some idea of what Liquidity Pool is.  Now let's try to know how to earn using this Liquidity Pool... In centralized  exchange  like Binance  or decentralized exchange  like Justswap  has the feature  of liquidity  pool... You also can be a liquidity  provider by using  their feature  and thus you can earn something .... Again if you swap or exchange tokens from Uniswap then you need to  pay a fee to complete the swap...And some of the fees you pay are paid to those who provide liquidity... Suppose you have an ETH and some ZRX tokens... Then if  you want, you can become a liquidity provider with these two coins...
Again imagine you have 1 eth that price  is now  350 usd and now if you want to keep this one eth in liquidity  pool but you also need  the same amounts  of another  coin that you want to keep in liquidity  pool.. Like you want to keep ZRX then you also need to have 350 usd ZRX..  Its means the pair  amount need to be same.. So i imagine  you keep one eth and 900 ZRX which total amount is 700 usd.. Now if someone wants to sell some ETH and take some ZRX, then   from your 900 ZRX he will be given ZRX as per his demand and instead ETH will be credited to your pool account... According to this calculation, the amount of ETH in your account will increase, since he sold ETH and took ZRX.  On the other hand, the amount of ZRX will be reduced...  Thus you will be given some part of the fee that will be deducted from the user while doing this swap...

 

Is liquidity  pool for you??
If you want to hold a coin for long term then liquidation  pool isnt for you.. Because if you want to hold ZRX for a long time and if you leave ZRX in Liquidity Pool while  the amount of ZRX decreases then in this direction the price of ZRX increases.  But the price of ETH does not increase in that proportion and thus here your loss will be as USD... For this reason you shouldnt use liquidity  pool.. And if its  no matter for you to  hold ETH or a ZRX hold then you can take part in the Liquidity Pool... Thus you can get a taste of mining with the Liquidity Pool part.. . you can take commission from the transaction fee...

 

Best of luck cryptotalk members 💕  

Thank you. This is a really good and big explanation about the liquidity complex. Many beginners are newly entering the field and do not really know what an accumulator is

[abdullah553 1981]

On 10/20/2020 at 3:48 AM, Dorjoy12 said:

Today  i am going to discussion  about liquidity  pool in my topic as it important  to know for every  crypto member ..    Those member  who work in crypto  world may heard about mining..  Still here has lot of members  who has  enough  idea about mining and some of them has basic  idea and its okay.. Usually those members  who do mining called minors.. For this, Minors receive commissions or earnings from transaction fees...  To do mining we all must need to have good computer  and ofcourse low cost electricity is required... Because usually  those device  that get used for mining need huge voltage  of electricity and its means the cost will be  huge ...  So if the earning comes from mining goes to the cost of electricity then there is no benefit in mining for us.. Again in many  country mining is not legal anymore..  That is why  its not possible  for every  one to earn from mining.. 

 

After read this  short discussion  of mining you can easily think what is the matter of liquidity pool with  mining,right? 
 So here  explain  it shortly about how to use liquidity  pool?? Because i am going to do discussion  about  it..
If you understand this discussion, you also can get a taste of mining by try this method.  Its means that you can earn something similar to the way miners earn from transaction fees everytime..  

 

At present, there are many decentralized exchanges, especially Uniswap.  Because only they were the first to use the logic of Liquidity Pool in the right way...  Also Justswap or centralized  exchange  such as  Binance has the facilities too  of  Liquidity  pool.. 

 Uniswap has two features, one is  which  "Swap" and another  is "Pool".. But you can be a liquidity  pool provider by use second feature  of Uniswap.. By this way we can earn something  from transaction  fees..  Which  means  you will get some taste of mining without doing  mining....

 

What is liquidity  pool??? 
 If you want to know about liquidity  pool shortly  then  its easy to  say this is a method where token get locked in smart contract every time..  ....  While those tokens provide liquidity for trading... This matter can be lil bit complicated for all of us but after proper discussion  hope  everyone  will  understand .. 
Why need liquidity  pool??
 We are well-known  with centralized  exchange  site such as Binance , Kucoin and coinbase..  In this kind of exchange  site you can see a order book..  There one side  has buyer order and another  side has seller order..  As we know, buyer always want to buy with low rate  but seller Always  want to sell with high rate..  Now suppose one buyer want to buy some BNB from Binance  exchange  site..  In the same time  one seller want to sell some BNB in Binance  exchange  site.. Now buyer want to buy per BNB by 25 usd but seller want to sell per BNB by 28 usd.. Now if the buyer changes his decision and his purchase price changes from 25 to 26.5 and the seller changes his decision to 26.5, then that word will be fulfilled... 

 But if the buyer and seller dont want to change their decision  then  that time what will happen  with market position ??  For this reason market maker come into market..  Then the market maker  give them  different  price according  to their choice..  Its means market  maker provide  them liquidation..  For this liquidation  provide no buyer or seller need to wait in market to buy or sell their coin..  Thus market become active always .. You must have seen that there are many exchanges where you have to sit with buy order or sale order for a long time... And it happen because  there has no good liquidity provider in those exchanges..

 

How to use liquidity  pool??
Hopefully, you have got some idea of what Liquidity Pool is.  Now let's try to know how to earn using this Liquidity Pool... In centralized  exchange  like Binance  or decentralized exchange  like Justswap  has the feature  of liquidity  pool... You also can be a liquidity  provider by using  their feature  and thus you can earn something .... Again if you swap or exchange tokens from Uniswap then you need to  pay a fee to complete the swap...And some of the fees you pay are paid to those who provide liquidity... Suppose you have an ETH and some ZRX tokens... Then if  you want, you can become a liquidity provider with these two coins...
Again imagine you have 1 eth that price  is now  350 usd and now if you want to keep this one eth in liquidity  pool but you also need  the same amounts  of another  coin that you want to keep in liquidity  pool.. Like you want to keep ZRX then you also need to have 350 usd ZRX..  Its means the pair  amount need to be same.. So i imagine  you keep one eth and 900 ZRX which total amount is 700 usd.. Now if someone wants to sell some ETH and take some ZRX, then   from your 900 ZRX he will be given ZRX as per his demand and instead ETH will be credited to your pool account... According to this calculation, the amount of ETH in your account will increase, since he sold ETH and took ZRX.  On the other hand, the amount of ZRX will be reduced...  Thus you will be given some part of the fee that will be deducted from the user while doing this swap...

 

Is liquidity  pool for you??
If you want to hold a coin for long term then liquidation  pool isnt for you.. Because if you want to hold ZRX for a long time and if you leave ZRX in Liquidity Pool while  the amount of ZRX decreases then in this direction the price of ZRX increases.  But the price of ETH does not increase in that proportion and thus here your loss will be as USD... For this reason you shouldnt use liquidity  pool.. And if its  no matter for you to  hold ETH or a ZRX hold then you can take part in the Liquidity Pool... Thus you can get a taste of mining with the Liquidity Pool part.. . you can take commission from the transaction fee...

 

Best of luck cryptotalk members 💕  

Indeed, it is a good pass. The explanation is good. I did not really know that the liquidity pool is accounted for in this way. I have to learn a lot on what it appears to know well transferred.