DeFi What is the liquidity of mining ? It mainly refers to the token asset support provided by users DeFi The liquidity of the project , The mechanism of obtaining benefits .
that , Today, I'd like to talk about DeFi What we need to pay attention to in mining .
01 Impermanence loss
DEFI Early stage of project , To attract traffic , There's usually non-destructive mining . Select the single currency supported by the project , There are benefits .( At the time of pledge , First small amount pledge , See if it can be redeemed normally ) All you have to do is pay for the miners , What we need to worry about is that the project side runs away , Or there is no liquidity in the pool of token funds , Can't sell .
Compared to mining without damage , We should pay more attention to the impermanence of mining losses caused by trading .
Impermanence loss ( English name ：Impermanent Loss), That is, assets change with currency price , The balance of assets in and out of the liquidity pool . Impermanence loss is aimed at DEX The provider of the injected assets in the liquidity pool of , Called liquidity providers (Liquidity Provider abbreviation LP),LP In the process of transferring assets to the liquidity pool (Liquidity Pool Also abbreviated as LP), And not injecting assets into the liquidity pool , The opportunity cost of assets in the above two different directions .
Essentially , Impermanence loss is the temporary loss of funds when providing liquidity / Non permanent loss . It's called non permanent loss , Because as long as you're in AMM The relative price of the token in returns to its original state , that , The loss disappears .
You can put AMM Imagine a primitive 、 Robotic market makers , It's based on a simple pricing algorithm , Offer quotes between the two assets at any time .
When AMM When the market price of token in the market goes up or down , There will be losses . The more volatility , The greater the loss .
So if you want to pursue higher returns , You can also choose one-sided floating trading pairs , That is, there is a stable currency trading pair , such as ： A token /USDT, Then you only need to worry about the rise and fall of one currency .
But if you choose a bilateral floating trade, right , such as ： Tokens, A/ Tokens, B, When both assets are volatile , Then sit on it DeFi Roller Coaster , It's much more exciting than the ups and downs in the secondary market .
Choose less volatile trading pairs , yes DeFi Self help guide for retail investors . And we need to fundamentally solve the volatile losses of decentralized exchanges , We need the project side to introduce the oracle .
02 The price of tokens fluctuates
The most dangerous risk of pledge may be the fluctuation of price . If the market is in a slump , Even though you may have received quite a lot of pledge rewards , Scaling down , There is still a possibility that the final revenue will turn into a deficit due to the falling price of the token .
therefore , It is important for the client to clearly understand that cryptocurrency is a highly volatile product , There are considerable risks .
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In addition to hacker risk , It could also be a fraud project . Some projects have infinite coin backdoors embedded in their code , This means that the project team can cast their tokens indefinitely . When the owner of the smart contract can call this function , Problems will happen . Final , The owner can be in Uniswap or Balancer Waiting for a lot of tokens for this project to be sold on the exchange , In exchange for almost all the assets added to a pool by liquidity providers .
That's why you should be very careful when investing in unaudited smart contracts . Although auditing does provide some comfort , But also remember , Even a successful audit can't eliminate the risk completely .