Liquid Pools: How it works and how much you can earn?

XBANKING
3 min readApr 2, 2024
crypto liquid pools

In the ever-evolving landscape of cryptocurrency, new concepts and technologies continually emerge, offering fresh opportunities for investors and enthusiasts alike. One such innovation that has gained traction in recent times is liquid pools. Liquid pools provide a platform for users to earn rewards by providing liquidity to CLMM providers. In this article, we delve into the world of liquid pools, examining their profitability, advantages, and drawbacks.

What are Liquid Pools?

Liquid pools, also known as liquidity pools, are an essential component of decentralized finance (DeFi) platforms. They serve as reserves of assets that facilitate trading on DEXs and CEXs. Unlike traditional centralized exchanges, which rely on order books and market makers to match buyers and sellers, DEXs utilize liquidity pools to execute trades autonomously through smart contracts.

To participate, users deposit their tokens into the liquid pools of the CLMM (Concentrated Liquidity Market Maker) provider. We will look at the platform of the leading liquid pool provider XBANKING. These tokens typically consist of an underlying cryptocurrency (e.g., Ethereum) and other tokens (e.g., Stablecoin or other cryptocurrency). In exchange for providing liquidity, participants are rewarded in the form of trading commissions and additional tokens.

How do the CLMM liquidity pools of the XBANKING provider work?

  1. You deposit your cryptocurrency into one or more liquid pools on the XBANKING platform.
  2. XBANKING in turn, as a liquidity provider for DEX and CEX, provides liquidity to these platforms.
  3. CLMM provider XBANKING earns rewards for providing liquidity and commissions from trading these tokens on CEX and DEX platforms.
  4. You receive fixed yield %APR, which are listed on https://app.xbanking.org while you place your tokens.

Profitability of Liquid Pools

The profitability of liquidity pools may depend on several factors, including trading volume, spread and commissions earned by the CLMM provider XBANKING. Generally, higher trading volumes and tighter bid-ask spreads can lead to higher profits for liquidity providers. In addition, some platforms offer incentives such as yield rewards or management tokens to attract liquidity providers.

XBANKING is the largest CLMM provider of liquid pools, offers liquid pools for over 130 tokens across 30 blockchains.

Pros of Liquid Pools

  1. Passive income: Liquidity pools offer the opportunity to generate passive income through rewards for providing liquidity.
  2. Accessibility: Unlike traditional financial markets, which often have high barriers to entry, liquid pools are accessible to anyone with an internet connection and cryptocurrency assets.
  3. Decentralization: By participating in liquid pools, users contribute to the decentralized nature of DEXs, which operate without intermediaries or central authorities.
  4. Flexibility: Liquidity providers have the ability to withdraw their assets at any time, allowing for seamless entry and exit from the market.

Cons of Liquid Pools

  1. Smart Contract Risks: The smart contracts on which liquidity pools operate are prone to errors and vulnerabilities, creating a risk of loss if exploited by malicious actors. but! The same risks are associated with traditional staking, so we consider this risk to be mutually insignificant.
  2. Market Risks: The value of assets deposited in liquid pools is subject to market fluctuations, and participants may incur losses if asset prices experience significant downturns. but! You can unlock your assets from the liquid pool at any time and get tokens back to your wallet, for further trading.
  3. Complexity and Education: Understanding the mechanics of liquid pools and managing associated risks can be challenging for inexperienced users, necessitating thorough research and education. but! We have already covered the major risks, other risks are more secondary.

Conclusion

Liquidity pools from XBANKING represent a groundbreaking innovation in decentralized finance, offering a new approach to liquidity provision. It is important to carefully evaluate the risks and rewards associated with these pools. As the DeFi landscape evolves and matures, liquidity pools will play an increasingly prominent role, driving innovation and providing liquidity across asset classes.

Links:

Liquid pools, Staking: https://xbanking.org

Twitter: https://x.com/xbanking_org

Telegram: https://t.me/xbanking

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XBANKING

Staking. Restaking. Liquid & CLMM pools. XBANKING is a non-custodial platform lets you effortlessly stake on 140+ tokens. https://xbanking.org