About liquidity pool of crypto..

[Dorjoy12 8962]

4 hours ago, abdullah553 said:

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.

 You can learn more about liquidity  pool by take your own research  in online mate..  But for your easy understanding  i can say that look into new crypto  currency  project which just  get started in crypto market..  You can see there that many trader  provide there liquidity  for the coin swap to create good hype about the coin @abdullah553

[Syriana 350]

These ideas are very good, my friend, and I think that many people and beginners have benefited from them, and we have to work to develop our ideas and commit to hard and active work, so I advise everyone to follow these rules and ideas to become really successful.

[Samotokika 1780]

On 10/20/2020 at 6:48 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 💕  

I was unfamiliar of the term liquidity pool I think that it is some thing  like mining but you post really helps me a lot and also many members of the forum to clarify their concept and it would be very helpful.Thank you soo much for your efforts.

[Dorjoy12 8962]

20 hours ago, Samotokika said:

I was unfamiliar of the term liquidity pool I think that it is some thing  like mining but you post really helps me a lot and also many members of the forum to clarify their concept and it would be very helpful.Thank you soo much for your efforts.

 There has still lot of topic in our forum about crypto by which  you can get the basic  knowledge  about crypto world activity..  Just  go to crypto world  section  where you can see topic  about blockchain , smart contract ,  mining as well about trading..  Just take a little research .. 

[AL SHAIMON 1293]

Pool system is not good. You will lose your coins there. Never do invest on pools. You will get payment on pool if other peoples join on pool. If no one joined on pool you will get nothing. So be careful before you join on pool sites.

[Dorjoy12 8962]

1 hour ago, Abdullah541 said:

can study liquidity pool that complete and when it is utilized in mining cryptocurrencies have a nice day dude.

Its necessary for every  member to know what is liquidity  actually .. Now a days you can see many token or new token has less liquidity  pool so that those coin getting died so fast..  To survive  up a token perfectly there should have enough  liquidity  always .... Though  its give good profits.  

[kryptonick 2659]

Somehow with the liquidity pool trick, DeFi managed to rescue and bring to the front hundreds of tokens that are mostly useless and given them a value which can be hundreds of times more than their actual price. This kind of tricks won't allow any token survive as there is always intrinsic value and most ERC20 tokens have none.

I still care a lot for DeFi for the core ideas some developers tried to utilize but they have done the lending part in a very naive and simplistic way. It could be better to ask for banks for amortization calculations and liquidation process, which was the reason the banks turned their eyes on DeFi in the last year.

The protocol problems (bugs) and the exploits we have seen so far, are a big drawback for DeFi and still hasn't allowed it to pop again. Everything is still very early in DeFi and if there is a way to fix these problems we may see some growth that will be at organic level with real adoption and real life use cases.