I don't know exactly when I became addicted to DeFi, but I remember well that one of my first steps was made through wrapped coins (was it LEO) on the Ethereum network 4 years ago (or it was even more). When ETH fees went through the moon, I moved to the BNB chain, and after that to Polygon... In the meantime, we got our own DeFi platform on HIVE (Hive-Engine to be more specific) in the form of DieselPools... When the PolyCUB thing went out of the window, there was a period when all my liquidity positions were in Diesel Pools, on Hive-Engine...
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Most of those first things were based on "farming tokens" more than on providing liquidity that would be used for swapping tokens... I mean, they were used for that, but not that much that you could have a "normal" income from transaction fees... The most rewards/earnings would come from farming some X token (usually from the platform where the pool was "hosted", and usually, those tokens had 0 use case)... Because of that, it was always the rat race to earn something as those farming tokens would go only down, and many times, very fast... Adding liquidity to the pair with some farming tokens would have some crazy APR (many times more than 100%, 200%, or 1000%), but in the end, you would just lose money...
In our "home ecosystem", Diesel pools on Hive-Engine, there were some exceptions, and the "setup" is a bit different... It is possible to add rewards to the specific pools + have those transaction fees too (at the beginning it was 0 fees)... If you know what you are doing and if you find some good tokens, you could earn 10-20% APR in some pools... After my previous experience, I began to ignore pools that have over 50% APR as they are mostly unsustainable... But...
As a DeFi-addicted person, I began to research other blockchains and what they can offer... In some way, DeFi innovation on HIVE stopped, while there were big improvements in that field on other chains... After ETH, BNB, and MATIC, the next big thing to explore was Solana... The methodology was the same, to ignore pools with big APR, and focus on pools where I would like both tokens or pair 2 stablecoins in 1 pool...
Concentrated Liquidity Pools
Unfortunately, we don't have this kind of pool on HIVE (yet)...
Concentrated Liquidity involves providing liquidity in a defined price range and requires active monitoring. Concentrated Liquidity pools have the potential to provide extremely high returns. Users have to be cautious of incurring too many fees when adjusting price ranges.
source coingecko.com
In short definition, concentrated LPs are like leveraged liquidity providing... Your provided liquidity is used in a specific range, and your earnings are multiplied by the ratio of your range... If the range is more narrow, you earn more... If it is more wide, you earn less... Of course, there is another side to this... When you reach the end of the range, you don't earn on fees, and you are stuck with 100% of the token that lost value compared to the other one...
Huh... long post... and I didn't get to the point... 😃 Generally, my idea was to provide liquidity to "ordinary" pools (no meme token, no shitcoins, etc) and to harvest rewards from transaction fees + investing in both tokens from the pair... If I finish with a lot of (any of two) tokens, I'm happy... But... There's more... As in the last cycle, one of the chains that did the best was Solana, I was using websites that were giving away airdrop points along with those LP fees... Usually, those points have no value (it is a risk) until they launch the token, but I didn't mind that risk as I was earning from fees... Those airdrops were a bonus! If it happens, great, if not, I earned something... ;)
And it did happen at a couple of websites... One of the best airdrops (for me) was at the Wormhole, Jupiter, and Kamino platforms... Speaking of that, as those platforms were doing their job great, making DeFi easy, with incentivized rewards, they attracted a lot of capital not just to them, but to Solana blockchain in general... I know that SOL is/was a darling of VCs, but still, they have good apps... Also, I would say that a big part of the success that happened on SOL in the last 2 years is thanks to these airdrops and NFT "hunters"!
It's important to say that even after those airdrops are finished, most of the apps are working fine and provide a use case for the whole ecosystem (not like with my first experiments on ETH, BNB, or MATIC)... I still have positions in many pools on Solana, but my addiction asks for more... 😃
If you have been in crypto for a longer time, and if you look back in the past, you will notice that every cycle had a couple (or only 1) of tokens that did extremely well... If you find the "next big thing", you could 10-100X your crypto portfolio!! I'm not that greedy, but 2-3X would be nice... 😂
So, learning from the SOL experience in the last 2 years, which blockchain is doing something similar lately, that could replicate the (DeFi) success? I would like to say HIVE, but I'm afraid it's not ready yet... Even if VSC comes out soon, the apps that could use it have to be developed and that needs time... On the other side, SUI is the chain that has been a buzzword lately, and it is super-fast...
I heard about it a year (or so) ago and I had to try it! To my pleasant surprise, transactions were fast, fees were low, and it was working even better than SOL! I began my research of the ecosystem and found a couple of solid DeFi websites, but the quality wasn't there... The potential was, but apps were half-finished, with a lot of promises, and not that many results... I did try some liquid staking tokens and forgot about it... Besides that, the market wasn't "ready"...
After a while, I paid another visit to the SUI ecosystem and another pleasant surprise! Apps have matured, they have polished their GUIs, and they are easy to use, some of them already have their tokens, while others have ready airdrops systems! Everything is ready and prepared for the next bull run! If we would have another 1-year of bull run, I'm almost 100% convinced that SUI will do better than SOL did last year! Let's see what happens...
Thank you for your time,
--ph--
PS. None of this is financial advice of any kind...
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