Yield Farming Part 2: Liquidity Pools and Liquidity Providers
- 3 years ago
What are liquidity pools? What are liquidity providers? Find out how liquidity pools are used in DeFi to create yield farming opportunities on the blockchain and how to become a yield farmer.
This is a 3 part series on yield farming. You can watch part 1 here https://vimeopro.com/beessocial/yield-farming/video/524025857
The first thing you need to understand about liquidity pools and liquidity providers are the players in this game. You are a liquidity pool provider in this game, and you are going to place liquidity into a liquidity pool. Thus you're the liquidity pool provider. To make this happen you are going to need to identify where you can find a liquidity pool.
What liquidity pools are designed for?
Look at a liquidity pool like this. There are cryptocurrencies that are widely traded, that many people just went out and purchased and they keep in their Coinbase or Gemini account and they just keep it there perpetually. And it's really not doing anything. It's not really working for them. There are people that need liquidity in order to make larger, more sophisticated trades like, arbitrage or loans or something else like that.
And where do they need to get those extra funds? The place where people get them is something called a liquidity pool. So if a more sophisticated investor needs to borrow funds,and it's all secure because it's all based upon smart contracts that if the borrower wherever isn't good for it, either the smart contract with self-destruct before it puts you at risk, or if they had collateral and it looked like their position that they were loaning against drop below that collateral, the smart contract would automatically liquidate them and you'd be made whole.
This liquidity enables sophisticated participants in this game to use your liquidity, to make trades and do things on their end. But whenever they touch those funds and the liquidity pool, they pay a trading fee on unit swap. It's equal to 0.3% is paid to everyone in the liquidity pool. It's paid and it's allocated to everyone based upon your percentage of the pool.
Click here to learn more about yield farming and decentralized finance (DeFi) on our live weekly Zoom calls https://session.beessocial.us/portal
Visit our website http://beessocialtv.com
Follow BEES.Social on social media
https://twitter.com/Crypto_Swarm
https://www.linkedin.com/company/cryptoswarm
https://www.youtube.com/channel/UCfQoY9QU7bsgb94NuTf_DwA
This is a 3 part series on yield farming. You can watch part 1 here https://vimeopro.com/beessocial/yield-farming/video/524025857
The first thing you need to understand about liquidity pools and liquidity providers are the players in this game. You are a liquidity pool provider in this game, and you are going to place liquidity into a liquidity pool. Thus you're the liquidity pool provider. To make this happen you are going to need to identify where you can find a liquidity pool.
What liquidity pools are designed for?
Look at a liquidity pool like this. There are cryptocurrencies that are widely traded, that many people just went out and purchased and they keep in their Coinbase or Gemini account and they just keep it there perpetually. And it's really not doing anything. It's not really working for them. There are people that need liquidity in order to make larger, more sophisticated trades like, arbitrage or loans or something else like that.
And where do they need to get those extra funds? The place where people get them is something called a liquidity pool. So if a more sophisticated investor needs to borrow funds,and it's all secure because it's all based upon smart contracts that if the borrower wherever isn't good for it, either the smart contract with self-destruct before it puts you at risk, or if they had collateral and it looked like their position that they were loaning against drop below that collateral, the smart contract would automatically liquidate them and you'd be made whole.
This liquidity enables sophisticated participants in this game to use your liquidity, to make trades and do things on their end. But whenever they touch those funds and the liquidity pool, they pay a trading fee on unit swap. It's equal to 0.3% is paid to everyone in the liquidity pool. It's paid and it's allocated to everyone based upon your percentage of the pool.
Click here to learn more about yield farming and decentralized finance (DeFi) on our live weekly Zoom calls https://session.beessocial.us/portal
Visit our website http://beessocialtv.com
Follow BEES.Social on social media
https://twitter.com/Crypto_Swarm
https://www.linkedin.com/company/cryptoswarm
https://www.youtube.com/channel/UCfQoY9QU7bsgb94NuTf_DwA