Diesel Pool Fees Saved You Money!
Ok, this headline is admitedly weird, but so is crypto. There's not a lot of places where I could say I'm going to add a fee to your service, but don't worry it'll save you money. That said, crypto is one of them.
A week or so ago I told folks that Hive-Engine was adding a small fee for people that use diesel pools. Fortunately, I didn't get a ton of hate mail for it. I was literally doing it to make everyone's lives better. And I think from the limited data that I have that it's working as intended.
Last week's example
Last week I dropped a post about this and provided this screen shot as an example of current conditions.
In it you can see how I'm attempting to trade 10000 hive for 76657 SPS. You'll notice the price impact of that is 4.63%. That means that even though the trade is free I'm losing 4.63% due to the fact that my trade is large compared to the size of the diesel pool.
In order to get more liquity on the dex hive-engine added a small LP fee per trade of 0.25%. This is a small enough number to not seriously impact most trades, but enough of an incentive over time to attract liquidty providers especially since 100% of the fees are going to the liquity providers (as opposed to going to hive-engine).
So, what happened? Well, it's hard to say overall because not all the tracking is in place, but from what I can tell the amount of Hive on the platform is up 20% and the trades are improving. Here's what it looks like today.
Now the price impact is 0.76%. So, the price impact went down from 4.63% to 0.75%. Yes there's now a fee of 0.25% so overall I'd say you now save 3% versus where we were last time.
And that's my point of this weird little pathway. We added a 0.25% fee and you ended up saving 3%. If that doesn't help you understand the unexepected consequences in crypto nothing will.
Disclaimer: The math for these liquidity pools is actually pretty complex. So, the story told in this post is simplified. You don't need to tell me there are more factors in play. I know that. You're welcome to share with the audience if you'd like to put in more detail and talk about how price movements of assets played into this as well.
CALL TO ACTION
If you have extra crypto consider putting it into liquidity pools on tribaldex.com. It's a nice way to get passive returns. Careful putting in funds because the balance of what you own will shift over time as prices shift.
Advanced Class
If you're looking for a way to reduce your income taxes you may find that liquidity pools can save you a ton. If you're operating a C-Corp in the united States you should talk to your accountant about capital losses that you can take by depositing funds into pools. You may find that these pools are a good option for you and your family as you attempt to minimize your tax burden.
Are the fees paid out in lump sums or do they like pool together over time and are paid out daily like other pool rewards?
Is there or will there be any sorta info to show how much fees equate in relation to rewards.
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I am also interested in this question.
they get added to the pool right after the swap happens
Very cool article.
Thanks a million, mate!
/miko 🐓
PS: Am flooding the pools as it is. Imagine having your money in the trad-bank today... no way.
the fees incentiviced me to pool my money on diesel pools, so yeah it’s way more lucrative now.
These pools make for some really great options to improve velocity of layer 2 tokens and hive itself. The small fee is totally worth it for ease of use IMO.
Thanks for the information, it's very interesting and weird at the same time. But I also think it's a transaction volume effect
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When will FARM be accepted as payment token for splinterlands?
This was highly interesting ... I have not explored beyond my HBD savings account, but this is interesting as it touches taxes ... instead of cashing out, allow a stack of Hive to provide liquidity and thus earn interest(ish) for that... interesting...
AT this point, I can say its way clearer how the fees are helping the pools.
Now if only there were some FAQ or easy to find posts with explanations...
But at least the "Marketpools Remove Liquidity" operations are shown in the history ;)
While this is great news, I understood that FEES are distributed to LIQUIDITY PROVIDERS. But I don't see that anywhere, no transaction history of such. Is this in place or not?
you can look it up on the engine explorer.
I don't see any FEEs from other swaps reaching my account while being a Liquidity Provider. It is not the FEE that you pay when swapping, but that when reaching the LPs. And I don't see any portion of the FEE coming my way, no data about it on the Hive Engine explorer or anywhere.
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It would be really cool, to get a guide what rewards you really get, when you invest into these pools. I do not need the exact formular. I have only a small number of Hive and DEC in the Swap.Hive:DEC Pool, but I do not understand the rewards.
Everyday I get some LP directly in my Hive-Engine Wallet. Are there any other rewards, directly from the pool? Where can I see them? When are they paid out.
You cannot really see the fees directly. They just accumulate in the pool over time. You can however calculate an estimated return you would get.
Really nice !
A great initiative to add more liquidilty into LP's.
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