Post by @stani • Hey
Do you supply liquidity into AMMs like Uniswap? If not, why not?
Comments
- Not normally. It depends on the pool, chain, and amm. Single side LPing is my speed.
Fun fact: my first uni lp was Ethlend/eth.
- I do but incurred losses doing that.
I have provided liquidity to uni-eth pair for years on the mainnet. But had to pay a lot of gas to manage the position over the years and it was out of range for several months too as I didn't want to pay gas yet again. Impermanent loss is huge as well. Effectively, it's in loss.
- I've done more, mainly to learn how it works, without the objective of financial return. With low values the gains are negligible. Therefore, for me, I find it more interesting to use LP, in a very conservative way, to balance the weight of the tokens in the portfolio in relation to pairs that I expect a reversal of the price appreciation trend. So I let the market decide how I'm going to rebalance the portfolio - that way I don't have to engage in analysis that I'm not qualified to do - and as soon as the reversal appears, I liquidate my position. Obviously, it doesn't always work. 😆
- Typically don’t
Sometimes tricky to determine potential level of impermanent loss and identify the best bands to supply liquidity
- I do, but only small amounts.
- Yes indeed although mostly small amounts, usually incentivised independent of the fees earned e.g. degen did an airdrop for people who provided liquidity that compensates for impermanent losses
Cost vs. benefit for the project is that greater/more LP is a strong indicator of health & viability