Education Technology Finance Cryptocurrency Trading Decentralized Finance (DeFi) Blockchain Technology
Eli5_DΞFi 🏭, 🦇🔊
Eli5_DΞFi 🏭, 🦇🔊

@eli5_defi

14 Tweets 91 reads May 22, 2022
Twitter
#GM!
What is #liquidity pool? how does it work? what is impermanent loss? how to minimize it?
This visual guide will help you understand #LP and how it enables decentralized #economy to thrive.
(1/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #PancakeSwap
#GM! What is #liquidity pool? how does it work? what is impermanent loss? how to minimize it? Thi...
LP is a vault into which participants deposit and lock their assets in smart contracts to form a market (trading pair) and make it liquid for those wishing to trade in that pair.
(2/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Infographic #yieldFarming
LP is a vault into which participants deposit and lock their assets in smart contracts to form a mar...
Most #LP requires assets to be paired, this asset will create trading pair by utilising constant product formula to ensure a fair price.
(3/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Infographic #yieldFarming
Most #LP requires assets to be paired, this asset will create trading pair by utilising constant pro...
As mentioned before, LP must maintain its equilibrium to ensure minimum price inefficiency. This can be done through the #arbitrage process.
(4/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Infographic #yieldFarming
As mentioned before, LP must maintain its equilibrium to ensure minimum price inefficiency. This can...
#Cryptocurrency #arbitrage is a #strategy in which #investors buy a cryptocurrency on one exchange and then quickly sell it on another exchange for a higher price. This will make the price in #LP become efficient.
(5/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX
#Cryptocurrency #arbitrage is a #strategy in which #investors buy a cryptocurrency on one exchange a...
Deep #liquidity in the pool will greatly affect the price, as it will determine how much slippage during the trade besides the size of the #trade.
(6/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Infographic #yieldFarming
Deep #liquidity in the pool will greatly affect the price, as it will determine how much slippage du...
Other mechanism, liquidity concentrator also available in @Uniswap v3. The #formula aims to improve #capital efficiency by assigning a #price interval, resulting in a concentrated #liquidity position.
(7/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #Infographic
Other mechanism, liquidity concentrator also available in @Uniswap v3. The #formula aims to improve...
Participating as an LP provider enables someone to capture LP token #yield and #profit generated in that #protocol
(8/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #YieldFarming #Infographic
Participating as an LP provider enables someone to capture LP token #yield and #profit generated in...
LP Provider also facing several risks: securities, fraud and most importantly #impermanent #loss (IL) that will be an integral part of the liquidity pool.
(9/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #yieldFarming #liquidity #Infographic
LP Provider also facing several risks: securities, fraud and most importantly #impermanent #loss (IL...
#Impermanent #loss is when a liquidity provider has a temporary loss of funds because of volatility in a #trading pair.
(10/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #yieldFarming #liquidity #Infographic
#Impermanent #loss is when a liquidity provider has a temporary loss of funds because of volatility...
To minimize IL, the provider could create a Volatile-Non Volatile or Non-Volatile LP to reduce the risk of IL. Also, the provider could tap the profit from the transaction fees and LP tokens.
(11/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #yieldFarming
To minimize IL, the provider could create a Volatile-Non Volatile or Non-Volatile LP to reduce the r...
Other methods are choosing liquidity pool w/ flexible ratio, single pool staking or LP asset that have an equal price (found in liquid staking)
(12/12)
#DeFi #Crypto #Bitcoin #Ethereum #AVAX #BNB #DEX #Uniswap #yieldFarming #liquidity #Infographic
Other methods are choosing liquidity pool w/ flexible ratio, single pool staking or LP asset that ha...
Below is several list of the DEXs where you could create LP:
@CurveFinance
@Uniswap
@SushiSwap
@RaydiumProtocol
@Bancor
@traderjoe_xyz
@BalancerLabs
@PancakeSwap
Complete List:
defillama.com
DefiLlama
defillama.com/protocols/Dexes

DefiLlama

DefiLlama is a DeFi TVL aggregator. It is committed to providing accurate data without ads or sponso...
Also shoutout to account below that have amazing educational content #DeFi
@blocmatesdotcom
@DeFi_educator
@rektdiomedes
@knowerofmarkets
@thedefiedge
@Route2FI
@VirtualKenji
@alpha_pls
@OmarOnChain
@DeFi_Made_Here
@0xHamz
@AstrocaveAvax
@The_ReadingApe
@JiraiyaReal

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Education Technology Finance Cryptocurrency Trading Decentralized Finance (DeFi) Blockchain Technology

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