Automated Market Making is the future of liquidity.
It creates a situation where liquidity providers are buying the dip and selling the peaks automatically by design, on top of farming absurd yields that put the legacy economy to shame. Cub still has 150% APR? Crazy... and if the Initial Dex Offerings work out token price and yield will both increase as CUB gets burned forever. Good deal. Soon™
With kingdoms in particular, users can often just auto-pilot these liquidity pools, allowing the generation of wealth to occur with little overhead cost.
Opposite of Bitcoin
AMM liquidity pools create a situation where tokens will never have supply shocks and automatically stabilize much more quickly than tokens who allocate no inflation to liquidity. These high yields ensure that there will always be a massive amount of liquidity provided even if users get extreme FOMO and don't necessarily want to sell. The honey pot of yield set on the LPs will always incentivize users to keep farming these pools.
For example, even if half of all the liquidity exits the market due to fear of "impermanent losses", that lack of competition will increase yields for those who remain in the pool by x2. It is unlikely that many more LP farmers will exit such a profitable yield, especially if token price is rising and that yield's value is getting two different multipliers (token value gains x yield gains).
RIP Goose Finance Today I noticed that our rivals over at Goose have the same token price as CUB (a loss of 99.7% from the peak of over $150). They played the game in a completely unsustainable way and now CUB has a higher market cap. Feels nice to overtake other projects that launched before we did. Expect that trend to continue. Cub has staying power, while many of these other projects are going to show their true colors much faster than their ICO predecessors as a result of their hyperinflationary nature. Unsustainable projects will crash into the mountain much faster this way, weeding out the scams much faster than 2018 was able to.
In any case,
AMM creates the incentives required so that bulls can greatly benefit the network without having the HODL the token. This is the main advantage. Not only is being in an LP extremely profitable to the individual, it's also extremely profitable to the network, as it allows outsiders to enter without a supply shock ever occurring. In fact, the more the price goes up, the more liquidity there is in the pools, as long as not too many people leave LPs as the price goes up (which moons price and yield if they do).
We can see that these systems are becoming self-equalizing and self-regulating. No matter what the price is doing, there will always be liquidity. The more risky it is to stay in the LPs (volatile) the more people will leave and the higher the yield will become. This liquidity never runs out because CUB and other DEFI tokens allocate ONE HUNDRED PERCENT of their inflation to sustain them. That's pretty wild, and we've yet to see how much liquidity these hyperinflationary honeypots will capture during mega-bubble insanity. I'm guessing we are about to see some absolutely insane things go down at the end of the year.
It is also worth noting that LEO gets a ton of free liquidity from the bLEO/BNB LP. This can only lead to a higher price of LEO, especially when more airdrops are announced. This also synergizes with the bridges we are building across networks. Interoperability is key.
Also the option to pair two coins together can't be understated. The CUB/BUSD, CUB/BNB, bLEO/BNB have all been amazing tools for me to employ in my crypto arsenal.
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CUB/BUSD Best pool for hedging and often has the highest yield, liquidity, and inflation allocation. If the price of CUB is going down or trading flat this pool is always a superior option to the Cub Kingdom which has very high competition at the moment (58% market cap dominance).
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CUB/BNB Best all around LP with the highest chance for upside. Best case scenario is that CUB goes up in tandem with BNB and there is no volatility or impermanent loss within this pool. The high yield and pairing to BNB keep this pool grounded to reality.
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bLEO/BNB Great pool to be in that suffers no impermanent losses from CUB movements. The yield here is raw and doesn't get manipulated when competition to hold CUB increases. It also provides a massive amount of liquidity for LEO and the bridge without diluting the value of LEO with extra inflation.
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Cub Kingdom Moonbags only! Put your money here if you think the price is going up and you don't want to sell any of these precious cubbers. This wouldn't be such a risky place to be if CUB didn't have so many diehard bulls willing to cram their stake into this option. Again, this pool currently has 58% of the entire market cap in it, which is an impressive statement considering the bleed from $5-$10 to 50 cents. Looks like quite a few of us have very high hopes for the upcoming IDOs.
4 Tools in the kit.
I use all four of these pools and they all have unique properties and value. The Kingdom is definitely the riskiest place to be, but with IDOs coming up (which are supposed to burn $1M on arrival) and being so close to our rockbed support at 50 cents, it seems like a no brainer to save up LP farm to go long rather than compound the pools.
I don't plan adding much more liquidity to the bLEO/BNB pool for a while. As the lowest yield of the main three farms and also the only one with a 2% deposit fee, it is the least attractive farm to me at the moment. This is especially true when I factor in that I believe LEO to be oversold, and I don't think the value from this free LP pool has really tapped into the speculative market yet.
I've even thought about exiting this pool entirely and just shoving it all into LEO (60k tokens) when it was bottoming out at 20 cents. However at the end of the day the pairing to BNB is a nice anchor and the yield beats anything LEO currently has to offer. At this point it feels more like a "leave it there forever" situation while using the passive income wisely.
Chant the rhyme, humans!
Conclusion
Finance has come as far as it's going to get with order books. This outdated model of the legacy economy was nice while it lasted, but it creates a situation where smaller users that aren't running a bot can get taken advantage of by the machines.
AMM is a superior solution (as long as it has yield). Bots can't win and have little advantage. There are no maker orders. All liquidity is provided at current market value dumped into a single pool. By automating this process of liquidity provision for anyone that wants to participate on any level, we created a solution on flat architecture that will eventually bleed into the entire financial sector and empower the holders of these tokens by exponential margins.
Posted Using LeoFinance Beta
Return from AMM: Set it and forget it. to edicted's Web3 Blog
