How Gen-Z DeFi Yield Farmers Are Making More Money Than Their Parents and The Focus on Liquidity Mining
It feels as if we were living in an entirely different world only a year ago. From the pandemic to the profound sorrow that the globe is experiencing, one thing has remained consistent: the desire for a better knowledge of our lives and finances, and BOOM — DeFi was born.
Naturally, although it may appear, the process was hastened by individuals who understood the IDEA and wanted it to happen! This concludes it, this is the one that’s going to stick around.
Users of DeFi frequently share their experiences, like how I converted X into Y using Z. The reality is, this isn’t what it’s all about. Liquidity mining is a method to restore financial logic and fairness so that everyone may benefit from a better, more sustainable future.
What Is Liquidity Mining and How Does It Work?
When you provide liquidity to an Automated Market Maker (AMM), you deposit your assets in a DeFi platform’s liquidity pool (usually in pairs, such as USDT/ETH).
Since the two phrases are frequently spoken similarly, one may also use the phrase “Yield Farming.” Nevertheless, it may be only a slight shift in the structure. Liquidity mining is only one method used in the Yield Farming area, which also includes other creative methods to profit from DeFi tokens.
Yield Farming Is The Rocket Fuel of DeFi
Users (referred to as token swappers) can then loan, trade, or spend their tokens in principle. All token swappers pay a small transaction fee, which is then pooled and distributed among all liquidity providers (LP).
Check this yield farming guide if you’re still unclear about how it does work and how to create revenue with it. Furthermore, you should take into consideration that rewards may well be paid in a different token than those deposited, and transfers may suffer losses on some rare occasions.
Imagine you want to use the USDC-ETH pair to add liquidity to the EmiSwap DEX pool. You will invest both tokens in the smart contract and get paid in $ESW tokens with an APR of over 400% if everything goes well. It’s that easy!
Promises and Pitfalls: Should I Become a Liquidity Provider?
With significantly fewer investments, liquidity mining brings increased risk but higher returns. Throughout this context, unfortunately, we should address Impermanent Loss. That means that while your tokens are locked inside a DeFi platform, they may depreciate, preventing you from generating rewards with the liquidity you added.
This loss might be momentary or irreversible if you need to cash out or swap the funds at a certain moment. When the price increases or returns to the initial price at the time of adding liquidity, your losses will be covered.
What if you have 50% ETH and 50% USDT in your portfolio. You may receive 30% in ETH and 70% in USDT if you withdraw because the liquidity pool may require more ETH for the token swappers. In that case, depending on the market, you might lose money if the ETH price rises.
Learn The Ropes Before Making the Right Decision
Instead of focusing on how much you want to make right now, consider how much you want to spend and how much you can afford to lose. Automated Market Maker (AMM) trading on decentralized exchanges is on the rise, allowing investors to earn passive revenue every second!
However, a fundamental grasp of the application’s features and how to utilize them properly is required. Even though many systems are currently regarded safe and have been fully audited, errors on the user’s side might result in losses. After that, there’s your decision. Always be on the safe side! You can learn how to perform all operations on EmiSwap by following super simple and detailed wiki steps.
Liquidity mining offers numerous possibilities, but the apps themselves cannot provide total security. Use is solely at the user’s risk and as a result, a significant study should be conducted before selecting a DEX, and the functionality should be evaluated using tiny transactions first. In exchange, a larger yield is coupled with a somewhat increased risk in liquidity mining. Above-average earnings may often be maintained by adding to multiple pools.
Provide Liquidity on EmiSwap: Get 100% ETH Fee Back!
You may notice when you start using Ethereum DEXs that ETH gas fees are really high! Don’t worry, because EmiSwap has the solution.
Here’s how it works: Swap tokens on EmiSwap or add liquidity to pools to earn a share of the trading fees. It doesn’t matter how much you traded: you’ll get a full refund of the gas you paid, even if you just swapped $5 worth of tokens. A 100% refund will then be allocated to your balance in ESW tokens.
You’ll be able to earn extra prizes if you use ESW. EmiSwap, like Uniswap, requires a 0.3 % fee on every swap. The remaining 0.05 percent is assigned to ESW holders, while 0.25 % is automatically dispersed among liquidity providers; i.e YOU!
The more ESW you have, the more benefits you get. Join the most rewarding DEX on the market: