🚨NOBODY TELLS YOU THIS WHEN YOU PROVIDE LIQUIDITY •••••••••••••••••••••••••••••
The first time I added liquidity to a DEX, I thought I'd found free money. Drop in two tokens, sit back, collect fees. A few weeks later I pulled it out, ran the numbers, and realized I would've made more just holding both tokens in a wallet and doing nothing.
Nobody warned me on why i shouldnt have done it that way. Turns out it's not bad luck it's just how a normal AMM works. SO WHAT HAPPENS EXACTLY?
When you provide liquidity the old-fashioned way, your capital gets spread across the entire price curve. But think about what that actually means. 90% of your money is parked at prices the asset will probably never trade at again, quietly doing nothing, while a thin amount near the current price is the only part actually earning fees. You're getting paid on maybe a tenth of your own capital and calling it a return.
This is the exact thing concentrated liquidity was built to fix, and it's what STONfi is bringing to TON this quarter.
Instead of blindly spreading your liquidity everywhere, you pick the price range you actually expect the asset to trade in. Same capital, tighter range, way more of it working at once. If you're right about the range, your fee earnings per dollar go up substantially because you're not subsidizing price levels that will never get touched.
Why this matters for TON specifically Liquidity across the chain is already thin, and every dollar sitting idle in a pool is a dollar that isn't helping depth, isn't tightening spreads, and isn't pulling in traders. Concentrated liquidity doesn't require new capital to fix that. It just makes the capital that's already there work harder.
I wish someone had explained this to me before my first LP position. Now STONfi is just building the fix directly into the protocol.
Not financial advice. DYOR
#DeFi #ConcentratedLiquidity $GRAM
The first time I added liquidity to a DEX, I thought I'd found free money. Drop in two tokens, sit back, collect fees. A few weeks later I pulled it out, ran the numbers, and realized I would've made more just holding both tokens in a wallet and doing nothing.
Nobody warned me on why i shouldnt have done it that way. Turns out it's not bad luck it's just how a normal AMM works. SO WHAT HAPPENS EXACTLY?
When you provide liquidity the old-fashioned way, your capital gets spread across the entire price curve. But think about what that actually means. 90% of your money is parked at prices the asset will probably never trade at again, quietly doing nothing, while a thin amount near the current price is the only part actually earning fees. You're getting paid on maybe a tenth of your own capital and calling it a return.
This is the exact thing concentrated liquidity was built to fix, and it's what STONfi is bringing to TON this quarter.
Instead of blindly spreading your liquidity everywhere, you pick the price range you actually expect the asset to trade in. Same capital, tighter range, way more of it working at once. If you're right about the range, your fee earnings per dollar go up substantially because you're not subsidizing price levels that will never get touched.
Why this matters for TON specifically Liquidity across the chain is already thin, and every dollar sitting idle in a pool is a dollar that isn't helping depth, isn't tightening spreads, and isn't pulling in traders. Concentrated liquidity doesn't require new capital to fix that. It just makes the capital that's already there work harder.
I wish someone had explained this to me before my first LP position. Now STONfi is just building the fix directly into the protocol.
Not financial advice. DYOR
#DeFi #ConcentratedLiquidity $GRAM
