FINTROPY LIQUIDITY PROVIDERS

In this article, the concept of providing liquidity in crypto will be demystified and explained in detail; we shall also see how LP tokens functions on the fintropy platform.

INTRODUCTION

A liquidity provider is basically someone who provides his/her crypto assets to help fund a liquidity pool and help in the decentralization of crypto trading. As a profit, they earn off the trades generated from the said invested platform or space. This is a passive income investment.

Before investing, the user/investor states the period to which they would be providing liquidity assets to the platform and has to stay there till the period lapses (think of this as an agreement contract). The provided assets which will be in tokenized form will be locked in smart contracts.

Liquidity pools make full use of automated market makers (AAM); these are people who are always willing to trade on platforms.

Liquidity providers earn an equal amount of liquidity tokens to the asset(s) provided. The tokens serve as the ‘show’ or evidence of the provided asset(s).

Liquidity on Fintropy

Liquidity on Fintropy works by rewarding decentralized asset management. When a portfolio is generated by a user, the user can make infrastructural set ups to underlie the tokens.

The way liquidity rewards work on Fintropy is that the investors set up their preferred portfolio on the platform and through that earn tokens. They can also buy tokens. This covers the concerns about investments and gives them the opportunity to pick from several assets. These portfolios are created using the Fintropy tokens called FINT tokens. Assets get Liquidity in a matter of seconds on the Fintropy platform and earn profits in the shortest time possible.

Risks associated with automated market makers liquidity, AAM providing includes the following

The danger of impermanent loss to liquidity pools is the major problem with AMM.

There’s also the issue of permanent loss which comes as a result the price difference between the assets you invested and the time you invested them. The loss is usually proportional to the disparity.

Automated market makers operate in such a way that it also help the other pairs to rise if one rises so that they are all in the same ratio.

The issue of the temporary loss is usually taken care of when or if the value of the liquidized asset returns to its initial and original price and value. Also, it can be repaired if rewards are provided to the suppliers.

The problem of the impermanent loss is taken care of by the trade charges which enable the investors to flip to another trade pair.

CONCLUSION

The automated market makers works by making use of and depending the liquidity pool. Fintropy liquidity provider system functions on a decentralized format, the focus being the ERC-20 tokens. The impermanent loss is the major problem with automated market makers and comes as a result of asset value difference between the time invested and the asset placed after which later becomes permanent loss.

USEFUL LINKS

Website: https://www.fintropy.io/
Telegram: https://t.me/fintropy
Twitter: https://twitter.com/fintropy
Medium: https://fintropy.medium.com/
Reddit: https://www.reddit.com/r/fintropy/
YouTube: https://www.youtube.com/channel/UCv1AymR_ToqPi4IrFqg57xA
Github: https://github.com/PESPCOIN/

AUTHOR'S DETAILS

Bitcointalk Username: Chidoskim
Bitcointalk profile link: https://bitcointalk.org/index.php?action=profile;u=2652432
Eth Wallet Address: 0x4F70c5e328B15825Fa456a4F32fEeF315ba88FDf