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RE: DeFi Liquidity Pools ! How do they work?
hi @the-prithvi
I've small question related to liquidity pools and impermanent loss.
I'm trying to wrap my head around it and based on my understanding:
- currently price of RBS is 0.2$
- I would add my funds to liquidity pool (pair RBS-BUSD) in relation: 1000 usd / 1000 usd
in that case I would need 5000 RBS tokens and 1000 usd worth od BUSD. Is that correct?
Now, what would happen if price of RBS would:
a) scenario one: RBS would drop down to 0.1$ (50% drop)
b) scenario two: RBS would go up to 0.4% (100% increase)
I presume that the moment I exit liquidity pool, then I would end up still with 1000usd worth of BUSD, but amount of RBS tokens would be different.
Now, my question is: how many RBS tokens would I have at the end of the day (depending on the scenario).
Enjoy your weekend buddy,
Yours, Piotr
Hii @crypto.piotr,
This is a good question, The moment you exit the pool you will receive the 1000BUSD that were locked during the staking period.
The amount of tokens you have at the end of the day depends on the apr(annual percentage rate) throughout the day. The apr is based on how many transactions your tokens have validated throughout the day. The more tokens locked the more the chance of gaining rewards. I am not sure how the price of RBS token will affect the current apr.
The current apr for BUSD is: