THE LEGENDARY $PEPE SWAP š¤Æ
Crypto is hilarious. Hereās what happens if you say āIām trying to earn 50%ā:Ā
Normal peopleĀ = āI hope I can get a 50% return over the next 10 years.ā
Crypto peopleĀ = āJust 50%? What is this, a bank for ants?āĀ
Crypto is the only industry where 50% returns will get you laughed out of the building.Ā And thatās because crypto investors often see 10,000% orĀ 20,000% returns, within a few days.
And if youāre lucky enough to get in on the investment early, you could turn a few hundred bucks into millions and become cryptoās nextĀ SlumdogĀ Memecoin Millionaire.
So hereās the million-dollar question: what do youĀ doĀ if youāre in that position?
Well, first you hit the club like itās Tuesday. Next, you need to understand two big conceptsā¦Ā
Liquidity and slippage.Ā I know I know, sounds like what happens during Spring Break in Cancun.Ā But these are two things that can save you hundreds of thousands of dollars.Ā
Today weāre gonna explain what they are and show you a worst-case example of what happens when youĀ donātĀ know about liquidity and slippage.Ā
The Worst-Case Example: This $PEPE trader lost $300k+ in one swap.
What happened?Ā This trader made 2 mistakes:
1/ They tried to swap all of their tokens at once
This one swap crashed the price of $PEPE by > 40% due to not enough liquidity. Liquidity measures how easy it is to turn an asset into cash. And the easier it is, the smaller the price impact of the trade.
In a lot of newer coins, liquidity can be hard to come by. PEPEās market cap at the time was ~300M, but this one wallet still made a serious dent:
2/ They forgot to set their slippage %
Slippage represents the worst price someone is willing to accept on a token swap. If the fill price falls outside of your desired range, the trade does not go through.
But if you set the wrong slippage, you might be giving your coins away for a fraction of their current value.Ā Itās kinda like when a pair of rare Jordans pops up at the goodwillĀ š„
Why should I care?Ā It is important to learn about the inner workings of the crypto products and applications that you use. A simple understanding ofĀ liquidity poolsĀ andĀ how dexes workĀ could have saved this wallet some serious dough.
But donāt feel too bad,Ā this trader still made off with some sizable gains.
