How To Use Liquidity Pools on PolyCUB and BEEswap
In order to enhance my returns, I have been looking at adding Liquidity Pools into my portfolio to provide some extra returns. Some of the options available were the likes of Anchor on the Terra network. However, we know that it recently blew up after offering around 19% on its UST stable coin.
I mention this to show you that there are risks with investing in LP's and if your funds are locked up for any period of time, you could lose some or all of your investment. Therefore, only invest crypto you are prepared to lose.
So an important consideration is that I want something not likely to blow up and that does not lock my funds up so that I will be able to make a dash for the exits in case I suspect that my position might get rekt.
Another popular choice right now seems to be Polycub, where you can stake some assets using their Kingdoms Polygon Yield Optimiser (yes it sounds like something out of StarTrek).
Here you can stake different tokens together and also yield some extra polycub.
The simpler Farms option has some pairs that you can stake and looks more interesting. Here we have some juicy APRs and we can see the new pHive and pHBD pairs. The important thing to consider here is that you would earn polycub and the price could fluctuate quite a bit.
The rate of inflation should now be much lower now than when polycub launched and many people are expecting the price to go back up again because of the fees earned increasing the yield. So far many who invested in the initial launch of polycub seem to be sitting on large losses, so that could signal a good time to get in and therefore the indicated APYs could be higher or lower than indicated based on the price of polycub when you get them paid out.
Here you can also use 2 stable coins such as pHBD and USDC and therefore reduce the risk of a possible IMPERMANENT loss. An impermanent loss is when the price of your assets change when you put them in the pool. Source
A third LP option would be on Hive layer 2 (Hive Engine) tokens where you can add to some popular pairs that have a good yield.
Here I have used BeeSwap to look at the available pools. A good tip I have picked up is that it makes sense to add token pairs of tokens you want to stack where possible. The good thing about using Hive layer 2 tokens is that all the tokens are on Hive and easily tradable and are kept in your wallet nice and easily. There is no need for metamask or any fiddly stuff.
To search for a pool, you can type in any one of your favourite Hive layer 2 tokens or Hive if you have some Hive converted to Hive.swap. Here I have searched for LEO and it shows me all the available LEO pools:
Here you can see that I've found a pair I want to invest in, I just need to click the + sign highlighted. Things to note about my selection is that under the +- sign, it shows you that for this pool there are extra rewards available! This is good :) You will usually earn some extra hive layer 2 tokens by investing in this pool. On the right, it says for how long the rewards are valid.
To remove your fund from the pool is also quite quick and simple. Just click the minus sign next to the plus and you can remove funds. Here I have also highlighted the expected APR. As you can see, that looks great, but you need to keep close monitoring of it, as it can fluctuate daily.
Once you click on +, you will get confronted with the screen above. Here are some important things highlighted. 1. shows your current available balances of each of the token pair you will invest in this pool. 2. allows you to click Max to invest the maximum amount from your wallet on one side of the pair for quickness. 3. this needs to be highlighted as you see here before you can add to a pool. If you don't have a balance on one side of a pair, for example, you won't be able to add to the pool.
That's it, once you've completed those steps, you will be invested in a liquidity pool!
Disclaimer:
Please note this is not investment advice, this is for Infotainmaint only.
Thanks for reading.
Resources:
Screenshots are taken from Polycub.com and Beeswap
Title screen created in Canva.
