Is it worth keeping the BAT crypto currency
Cake Defi experiences
PASSIVE INCOME from BITCOIN, defichain (DFI) AND KRYPTO
Liquidity mining is the latest service from Cake, and it is also the service with the highest return at a comparatively low risk, even without the need for technical experience.
Liquidity mining is required because there is no order book, no matching and no price oracle, as these systems are always centralized and vulnerable.
The DEX (Decentralized Exchange) so has no way of using this route Determine market prices. So liquidity mining is needed. That means getting independent liquidity miners two trading pairs be put into the system, for example BTC-DFI.
These liquidity miners who put their money into the system naturally want something in return. You get what are known as "Liquidity Mining Rewards".
These are calculated from the entire Liquidity Mining Rewards of the Exchange, which can sometimes amount to over 1000% APY, especially at the beginning.
If you now contribute, for example, 10% to the entire liquidity pool, you will receive a whopping return of 100% p.a. with a relatively small risk.
In addition, the liquidity miners receive a share of the fees that the exchange takes - for DeFiChain DEX, for example, this is 0.2%.
As already mentioned above, there is of course also 3 risksthat must be considered in liquidity mining. But these are relatively low.
1. Smart Contract Risk
There is always a risk that there is a bug in the smart contract code that can be exploited. At DeFiChain, this risk is generally classified as very low, as the blockchain is non-turing-complete and therefore there are far fewer potential errors.
2. Project risk
In general, everything is fine with most large projects, since Uniswap and DeFiChain, for example, are open source, so everyone can check and verify the code themselves and also regularly commission external security audits.
3. Impermanent Loss
The risk here is that the pool will shift and, for example, the prices of BTC and DFI will develop in such a way that if you were to pull your liquidity out of the pool now, you would make a loss. However, this always balances out in the long term, and so this risk is only a temporary, short-term one.
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