No one talks about how profitable providing liquidity is anymore
Newcomers have all been taught the hard way
The history of LPs goes back to the last great bull market:
DeFi Summer
Half in stablecoins, half in crypto, bundled together as a single asset
When the coin goes up, it automatically gets swapped for stablecoins
When the coin goes down, stablecoins automatically get swapped for the coin
There’s only one scenario in which people say LPs make money: the coin price rises over the period
Whether it’s US stocks or crypto, there’s only one way to make money: a one-way climb.
But a one-way climb means starting with only half your funds invested and selling more as the price rises. The actual return is lower than holding the coin with half your funds, let alone holding it with all your funds.
These days, the market either surges or plunges.
Once it starts falling, you keep buying more as it drops, then suffer through holding the coins before getting to enjoy the crash
/
Market trends:
Could go up
Could go down
Could also move sideways.
Sideways trading is actually the only market condition where LPs offer controlled risk and steady returns.
But crypto moving sideways??
Do you mean moving sideways between 10K and 200K?
Newcomers have all been taught the hard way
The history of LPs goes back to the last great bull market:
DeFi Summer
Half in stablecoins, half in crypto, bundled together as a single asset
When the coin goes up, it automatically gets swapped for stablecoins
When the coin goes down, stablecoins automatically get swapped for the coin
There’s only one scenario in which people say LPs make money: the coin price rises over the period
Whether it’s US stocks or crypto, there’s only one way to make money: a one-way climb.
But a one-way climb means starting with only half your funds invested and selling more as the price rises. The actual return is lower than holding the coin with half your funds, let alone holding it with all your funds.
These days, the market either surges or plunges.
Once it starts falling, you keep buying more as it drops, then suffer through holding the coins before getting to enjoy the crash
/
Market trends:
Could go up
Could go down
Could also move sideways.
Sideways trading is actually the only market condition where LPs offer controlled risk and steady returns.
But crypto moving sideways??
Do you mean moving sideways between 10K and 200K?