What are the risks with liquidity pools?
Recently, I created a post called an interesting income source on Hive – Providing Liquidity and there were plenty of interesting questions in the comment section. I explained similar things several times and I thought it might be a good idea to explain the risks related to liquidity pools in a separate post. It's not an easy task and instead of explaining what impermanent loss is, I try to show the effect through some examples.
For that I use a website that allows you to play with numbers and calculate the loss/gain you would make in different situations.
With @ph1102, I'm running the @liotes project.
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Nice and useful topic.
I, too, often use that site to simulate possible scenarios in the liquidity pools in which I have invested
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I like this site because the results are very stright forward and understandable.
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I'd like to say I do this sort of dilligence, but I'm generally just accumulating tokens and liquidity positions for communities I support. One of my goals for 2025 was to dig into communities interact and get some sense of their "vibe".
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Great video my friend you clearly know what you are talking about have you considered setting up a course teaching through email.
It could help you build an audience that you can take anywhere and it could give you more exposure to your content and projects.
You could save people a massive learning curve as well as brand yourself the expert you obviously are or at least on the path to being.
Honestly mate i have seen many of your videos now and you make a lot more sense than most.
@achim03 Keep up the awesome work bro 👍
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Thanks a lot for this very nice feed-back :-). When I started on hive, I used to build a list and shared my posts with the list but I have to say that I have been neglecting my list for the last two years...
Good one. Even I understand where's the point! 😎👍
This is another useful video for Liotes Academy.
I'm very happy to hear that :-)
Pools are high risk but also high profit. The problem is that they take you out of range and if the range is too large the profitability is low. If the commissions are high then losses appear sometimes without having the perception until the end.
It is a game on the wire.
By the way, a very good tool.
If you deal with pools that have a multiplicator effect, the range matters as well. Income is higher but risks as well with them :-)
The risks are there, but I tend to think that investing when there are two tokens that I don't mind holding. It's the best way to do that. I agree that its risky to pool for a token that you are unsure about.
For me this is exactly the situation where I don't mind providing liquidity.
There is definitely a livelihood in them but here we are getting more profit so people invest in them and earn money from staking so here in the crypto industry there is risk in every place without risk. Profit cannot be obtained.
Not sure I understood what you mean!?!
Was thinking earlier today, do I really understand liquidity pools? Thanks for this
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I'm happy you found it usefull :-)
Great video, thanks for the information.
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Thanks for stopping by!
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I think the risks or LPs which involve swap.hive on one side are especially volatile, as I've mentioned in my comments on the Liotes post recently. Unless the APR offered is extraordinarily good, I would still generally stay away from it.
Thanks for sharing! Similar to what I have commented earlier, I think with so many considerations and risks to take note, the APRs of liquidity pools doesn't justify the additional return I feel. But that's just me.
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Thanks for the insight.
This is very interesting and now i understand the risks better.
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