Steemitblog: Deep Dive into DeFi: How much can I earn being a Liquidity Provider?
In other words, what’s my ROI or Return on investment?
In order to explain how much you can make, let’s look at a project All Steem investors want to succeed: Steem Tron Liquidity Pair on JustSwap WST-TRX
But first... What’s a Liquidity Provider?
One who deposits dollar equivalents of trading pairs into the trading pools in exchange for a portion of the transaction fees paid by traders who trade or swap assets on these decentralized exchanges. Providing Liquidity is profitable and safe, so it is attracting investors from outside of cryptocurrencies usual ranks, and it has resulted in billions of dollars moving into DEFI this year.
Dollar Equivalent Pairs
A dollars worth of each token is a dollar equivalent pair.
WST-TRX Trading Pair Liquidity pool
As you can see from the below pictures the Steem-Tron Liquidity pool, formal symbols WST-TRX has over 55,700.00 US dollars worth of tokens in it.
So how do you earn and how much?
In this real world example, there are 1,000,000 plus TRX and 190,000 plus WST and total value of the Liquidity pool is $55,142 which yielded $1658 in 24 hours.
Annualized that is 1658x365= $605,170 or 605,179/55,142 or 1090% annualized yield.
You can do the numbers yourself.
Profit per day times 365 days, divided by total investment or value of the pool. So even if the transaction fees go up and down, and average only one half of 1668, that’s still an annualized yield of over 500%.
It’s crazy I know, but it’s why Wall Street Girms are worth billions. They make a little money on every transaction. It’s also why DeFi is so hot right now and Billions of US Follars are pouring into Ethereum and the DeFi projects in Ethereum. The yields, even fractions of these yields are far greater then what’s available outside of cryptocurrency.
It’s far more profitable to facilitate every trade for a fee, then to make the occasional winning trade.
Thank you Project-w developers! Www.projectw.io
Link to project post:
Steemitblog: Deep Dive into DeFi: How much can I earn being a Liquidity Provider?
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People who outside of crypto never believe me when I told them they can get this number of APY on their investment, they said it won't be sustainable and will collapse soon. There is a risk to anything in life, just try to manage and minimize the risk.
Hi @cryptokannon
I know what you mean. I think of DeFi returns like Tesla mooning. How long can it last? I don’t know. But can I still make crazy money? Yes
It is very low risk as well, from every transaction you are going to win your share, without doing anything, just to put your asset into the pool.
I am so happy that with WST, literally we connect to the Defi world.
Steem on.
#twopercent #india #affable
Thank you for emphasis on safety and security. It’s locked in a smart contract, as illiquid form.
Hello @shortsegments
The returns on liquidity provision is really amazing. It's one really cool way to multiply one's income. Talk about risk and I'll say you almost have nothing to loose. One can start with a small amount they can spare and then use the profits to re-invest. It's something worth considering. How to raise capital to start liquidity providing shouldn't be much of a problem for anyone.
Sometimes, we meet our financial goals in other businesses outside crypto and even if we decide to re-invest profits, sometimes we'll usually not to invest all the profits in one business. The remainder in this case can be used to start out liquidity providing.
Also, one can save a little money from his regular income to try out liquidity provision. When the amount becomes significant, he person can then invest it.
It isn't that difficult is it? After all, it's business and another profitable source of income.
#twopercent #nigeria
Very true. We are simply holding our assets in the smart contract, in an illiquid form, so it’s safer then in our wallet as liquid form. Most hold their tokens in their wallets earning nothing.
Great!you are doing fabulous job 👏🏼😊😍
Sir can i know how to do all those swaps in mobile,how to connect tron wallet in mobile. I am eagerly waiting for your answer.
In mobile all those liquidity providing in possible,if possible pls hive detailed post about it.
Nice post from you . Have a great day my friend.
#twopercent #affable #india
Sure,
https://steemit.com/sowsun/@shortsegments/steem-s-financial-advantage-on-justswap-defi-platform-we-mine-steem
https://steemit.com/steem-tron/@shortsegments/steem-now-trading-on-tron-justswap-as-wrapped-steem-or-wst-thanks-to-project-w
Thank you very much for help. Have a great day ahead
Isn't that the dollar volume though, not the fee totals? The fee totals are fractions of the dollar volume and are divided among all liquidity providers. This example doesn't look quite right to me...
1658 x 3% = 48+1.5+.24=49.74x365=18,155,
18,155/55,000= 33% ROI
Do you collect all 3%? Is it 3% of the volume or 3% of the fees?
On Uniswap you share transaction fees with the platform, but on Justswap all transaction fees, which are 3% of the volume go to the Pool.
Hi
This is my understanding:
It’s transaction fees. These are usually 3% of the transaction value, so although they are usually reported out separately, you can also calculate them from the transaction volume number.
Ok so 3% of the total volume is fees paid to liquidity providers. That 3% is how much you would get if you were the only one in the pool as that number is shared with all providers, no?
That’s the total payout on the pool, so you share it with other pool members. But the ROI for the pool is your ROI on your investment. So if it’s 30% for the year you should see that for your investment.
Great thoughts, I hope you always work