Investing in Liquifi: Benefits and Step by Step Guide
Liquifi is a new protocol for decentralized liquidity pool exchanges that combines the constant product AMM with some ideas from order book exchanges. With this, Liquifi becomes a golden cut solution for the price slippage and front-running problems that other liquidity pool DEXes face. You can find a more detailed technical discussion in our previous post and this post by Vitalik Buterin.
Security of Liquifi is externally audited by pessimistic.io — the official report is available here.
We invite the DeFi community to invest in Liquifi pools and become liquidity providers. By doing this right now, investors will get the highest possible outcome from yield farming and governance token mining opportunities.
Liquifi Investor Benefits: Yield Farming and Governance Token Mining
Liquifi is a next-generation DeFi platform that features both yield farming and governance token mining benefits from the very beginning.
Yield farming in Liquifi is available due to the liquidity provider fee cut from every transaction on the platform. Initially, the fee is set to 0.3%. That is, if a swap operation equivalent to $1,000 is performed, $3 will go to liquidity providers. One important thing to note here is that Liquifi is much more efficient for small pools than any other DEX.
On a medium-sized DEX with a pool size of $10M, the usual daily volume may be $1M. Then, the daily profit of liquidity providers will be $3,000 or about 11% APY (annual percentage yield).
For Liquifi, the same daily volume of $1M may be reached on a much smaller pool, say $1M. Then liquidity providers will get 10-times higher APY of 110%!
Governance token mining in Liquifi is backed by the emission of LQF tokens. The excellent news is that Liquifi is a fair launch project. This means that the total supply of LQF tokens will be handled to liquidity providers via the governance token mining procedure. LQF tokens can only be obtained by investing in Liquifi pools with fair distribution according to the share of each liquidity provider. The share is calculated weekly and depends not only on the total amount of invested assets but also on the time that these assets were locked. For that liquidity providers should stake their pool tokens (received when investing in pools) to the Liquifi governance contract (this can be done in the Governance section of Liquifi UI). The staked tokens can be removed later at any time.
LQF governance token is very similar to the famous YFI token from Yearn.Finance project that reached more than $1.1 billion capitalization just one and a half months after its launch while the price of each token exceeded $30,000. LQF tokens give to their holders full control over the evolvement and parameters of the Liquifi protocol: to change liquidity provider fee, to turn on and off some protocol features like zero fee for arbitrageurs, to control quorum, veto, and other thresholds. When newer versions of the Liquifi protocol will arrive, they will also be applied using the existing governance procedures.
There are no tokens reserved or premined, no founder rewards, no special permissions for the smart contracts owner — everything is given out to community from the beginning.
The total supply of LQF tokens will be 100M, distribution starts from 2.5M tokens every week, slowly decreasing. The active phase of the mining program will last for about 10 years. For example, if some liquidity provider invested 10% of total liquidity during the first week after launch, he will get 250K LQF tokens. During the second week, approximately 2.44M tokens will be minted. If the liquidity provider keeps his share at 10%, he will get 244K LQF tokens.
Now liquidity providers have a unique chance to get significant amounts of LQF tokens even with modest investments. Investing is easy — see the step by step guide below.
Investing in Liquifi Pools — Step by Step Guide
Step 1: Open the Liquifi web app and connect your wallet (Metamask or Portis).
Step 2: Go to the “Add liquidity” section.
Step 3: Select a pair of tokens and corresponding amounts in Input A and Input B fields. You can select any pair you want. If a pool already exists for a chosen pair, you need to only enter one value, the second will be automatically calculated based on the current pool ratio. If you create a new pool, you should enter both amounts, the ratio will define the initial exchange price for a new pool.
Advice: you should invest in pools with ETH to be able to take part in the LQF mining program.
Step 4: Press the “Add liquidity” button and confirm the transactions in your Metamask or Portis wallet.
Step 5: Go to the “Governance” section and select the pool that you have just invested in.
Step 6: Enter the amount of available pool tokens to deposit on governance.
Advice: you can use the copy icon that appears when you hover on the “Pool tokens available” field to take the precise amount of pool tokens you own.
Step 7: Confirm the transaction in your Metamask or Portis wallet.
Step 8: Return to the “Governance” page every week to calculate your share and claim LQF tokens.
Disclaimer. Liquifi is a technical platform based on public and externally audited smart contracts that implement an automatic market maker algorithm for exchanging digital assets. Developers of the platform do not receive any revenues from it. Trading and investment decisions are made at the risk of platform users.
