Concentrated vs Automatic Liquidity Pools

How to DeFi, pt 3.

(This article is not financial advice. For educational purposes, only. To review pt. 1, click here. For pt.2 click here.)

Welcome to another night of DeFi. Let’s get you some more coins.

If you still need an underlying $SOL position, place “POST ONLY” buy orders under the price on Coinbase so that you can catch discounts.

To accumulate Solana at a discount, catch dips on Coinbase by placing buy orders under the current price. Use “POST ONLY” orders on Coinbase Advanced to save on fees.

Once you have some $SOL, make a new hot wallet to get those coins off of the central exchange.

We already showed you how to earn $MNDE to get voting rights on Solana’s largest liquidity provider and tonight we are going to show you how to accumulate $RAY so that you have voting rights for the raydium.io protocol which offers advanced DeFi pools.

Concentrated Liquidity Pools

Let’s check out the concentrated pools so we can earn some $RAY.

A concentrated pool allows us to choose our own buy/sell price ranges, it is a good idea to adjust these based on your financial goals.

If you had some time to keep up with the price you could adjust it based on the current volume to get the most out of your money. If it trades out of range you will suffer impermanent loss so if you can’t keep up with it you can choose a standard pool or leave your $ staked. A good practice is to use small amounts, set a wide range, and keep up with the prices by checking once or twice a day and updating as needed.

Concentrated pools can increase gains by letting you choose the price range.

Make sure you understand impermanent loss and start small when trying new pools. It is a good idea to set a wide range as if the price goes out of range on either direction then this will lead to impermanent loss. To not have to worry about that you can stick to a standard pool or farm.

Choose your pool and click “create position” in the Concentrated pool to earn Raydium (RAY).

For the concentrated pool, split the Solana you want to use 50/50 with $USDC using raydium’s swap. A good time to do this can be days like today, after getting some unrealized Solana gains.

Swap half your SOL to participate then click confirm

After splitting your $SOL into 50% USDC, you can add your liquidity to the concentrated pool and set your price range.

Confirm your deposit and wallet transaction for the concentrated pool, not risking more than you are willing to experiment with.

This will give you an NFT that represents your stake in the Concentrated pool. Do not burn or get rid of it or you will lose the liquidity that you provided.

Automatic Market Makers

AMM Pools will automatically spread out your liquidity by dividing your coins across the entire order book so that you can earn fees no matter where the price goes. The standard AMM pools will not go out of range so there is lower risk of imp loss then the CLMM pools but since less of your money is earning fees on any given trade, your % earned is also lower compared to a CLMM.

Searching for Solana under the “Pools” button on the left will give you some good liquidity pools to earn more $SOL, $mSOL, and/or $USDC.

https://raydium.io/pools/ — Type “mSOL” in the search

Choose your pool.

Click the circled icon to make a swap.

Use the swap to do a 50/50 split on your stack.

click “half” to split your stack when you get unrealized gains from your $mSOL

Click the swap button and return to the $USDC liquidity pool

You can use swaps like these to lock in $USDC when you get profits or to mitigate volatility risk from the day-to-day price fluctuations in Solana. Use the USDC/SOL pools to earn USDC on the way up and SOL on the way down, automatically/passively.

Confirm that you understand the risks and confirm your transaction in your wallet. The new coins in your wallet are your liquidity tokens and they will be burned when you withdraw from the liquidity pool.

These pools take advantage of volatility/arbitrage in the marketplace by utilizing AMM (automatic market makers) so that you can earn your share of the fees according to the size of your liquidity position.

You can keep track of your pools by clicking the “my pools” button

It can be handy to take a screenshot of your new positions so that you can compare and update them when you check back to see if your strategy is making or losing money.

There is even a pool for the free $MNDE that we are earning until Dec 31st from using marinade.

$MNDE on raydium.io — You could return the love by adding some liquidity or just keep an eye on it, for now.

Sticking to the primary coins/pools like $mSOL, $SOL, and $USDC can be safer than others to build larger positions over time as liquidity increases.

It is a good idea to actively manage the positions by at least checking on them occasionally and never risking what you can’t afford to lose.

If you don’t want to be active, worry about managing liquidity pools, or impermanent loss, consider delegating a larger native stake through marinade so you can just sit back and collect your Solana. It takes 2 days to start or end a native stake.

You can always do a large native stake and a smaller $mSOL stake to experiment with $mSOL and participate in the DeFi eco-system to earn crypto rewards. A liquid stake gives you the ability to end a your stake at anytime.

Thank you for reading! To review pt. 1, click here. For p1.2, click here.

You can find my ref link to marinade.finance here. Thank you for using it.

You can support articles like this by donating $SOL ($mSOL) directly:

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(This article is not financial advice. For educational purposes, only)