Why take the extra risk of liquidity pools, if the alternative is already outstanding?

pSPS launched

The pSPS-Polycub liquidity pool launched on Polycub as of yesterday, and I see dozens of posts all around me about that. And it surprises me, that this gets so much traction. Currently the liquidity pool is giving a return of around 100 %. But we all know that will drop substantially once more funds get dumped in the pool. And there is exactly the catch. Let me tell you what I am talking about.

Knipsel.JPG

Staking SPS +/- 60 % return

Currently you are getting a return of around 60 % in SplinterShards and Vouchers for your staked SPS tokens. That number has been quite stable the last month. So, that is a very nice return. But indeed, staking your SPS in the liquidity pool brings you over a 100 % today, but it has just been launched. That number will drop, probably to around 40 % or lower, once more funds get into the pool. Is that still a good deal then? Compared to the straightforward staking of your SPS in the Splinterlands game itself. In my opinion, it isn't.

Liquidity pools have a risk of impermanent loss, and you get paid out in Polycub, that gets locked. For which you have to pay 50 % penalty if you want to get it free. What will happen to the price of Polycub in the future? Nobody knows, that is for sure. But in my opinion getting paid in SPS for your staking is a lot more rewarding for the investor, as there is just more utility in the SPS token than in Polycub right now. The SPS will probably go up in value, once the airdrop is over, and it will be the main token in the Splinterlands game. I just don't see the value in unstaking your SPS from Splinterlands to put it in the liquidity pool. There is risk involved, and the currency you are paid in is not as attractive as SPS itself...

ilikesimple.jpg

I like it simpler

I have become less attracted to all of the DeFi offers out there. I maybe old skool, but I just like it more plain and simple. Stake and reward, that is just fine for me. Liquidity pools, Diesel Pools, etc... are all a bit more complicated, with uncertain returns, unlocking fees, etc... Call me old fashioned, but there is nothing wrong with plain and simple. Even if it brings in a little less return. Maybe it makes me sleep better at night. And for heaven's sake, good sleep is worth a lot of money!

Sincerely,

Pele23

Posted Using LeoFinance Beta



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I couldn't agree more mate. I read their post last night and though WTF...Crypto for the masses? lol...only if the masses all have a PhD!

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There are a few reasons people take these options:

  1. Instant liquidity - if you are staking SPS on Splinterlands, then you’ll get a 55% APR but you also have to lock your SPS for 28 days. Liquidity pools are… liquid! You can unstake instantly and take advantage of market movements
  2. Trading liquidity - by providing liquidity, you’re becoming a market maker and supporting the trading liquidity of that asset on another platform while getting paid fees + yield to do so
  3. Diversified yield - as seen with the recent rise in SPS staking, the yield can change drastically over night. In this case, it doubled the Splinterlands native staking yield but that may not always be the case. A liquidity pool simply offers another way to diversify the yield you can earn on an asset

This all being said, yes there is a different set of risk. There is also a higher learning curve. These are the trade-offs that make the APR for staking pSPS 2x higher than staking SPS on Splinterlands. Hope this helps!

Posted Using LeoFinance Beta

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Hé man, I am definitely not trying to diss you here. It’s just not for me. And there’s nothing wrong with that. You are doing a great job, I have learned a lot through Leofinance, and you are to thank for that. Anyone invested in the LP’s, good for them and for the liquidity. I recognise that completely, but I just wanted to point out, that simple isn’t necessarily worse than more complicated… 😉

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What could be more beautiful than a drop of water)... have you seen how beautiful it is?!)

Posted Using LeoFinance Beta

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You forgot to add that it all feeds into the entire platform. The greater the success of the pSPS pool, the more it affects the other pools and all the other holdings on Polycub.

This is overlooked. People want to separate the different parts when they are all intertwined.

Posted Using LeoFinance Beta

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I think the yield on SPS in Splinterlands only doubled due to the VOUCHER price being included. Otherwise, the 20% or so from staking SPS is still there and you still get that 20% in the form of SPS.

You are correct about the liquidity but the trading liquidity isn't guaranteed. I don't really think there is that much demand for SPS because the utility on it hasn't been developed. This could change but for now, that is my view.

Posted Using LeoFinance Beta

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I think that a yield of 20% is already a great achievement.

Posted Using LeoFinance Beta

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20% is laughable, who want to wait 1 year to get 20%??? Not me... HEX paid 10000X or 1000000% in 2 years!!! you need to come to your senses.

Posted using LasseCash

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You're trying to mold candy out of shit, it doesn't happen, eat it yourself.

Posted Using LeoFinance Beta

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Dude I dont need you, who you think you are??? There are already people making those 40000%... that you like 60% over that, is your problem! I came up with the ideas for ONE OF THE BEST CRYPTO PRODUCTS EVER, so now stop commenting, if you have no interest in that, thanks!

Posted using LasseCash

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You're right, I shouldn't waste my time on a crazy con man who has delusions of grandeur.

Posted Using LeoFinance Beta

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Oh you still believe we live on a ball, is that what you are saying???

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If it's too good to be true, it probably is. I don't think that 10000x will last.

Posted Using LeoFinance Beta

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Let's just say, for the leisurely, SPS staking has everything a retired person needs)

Posted Using LeoFinance Beta

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There are different degrees of risk. That is why having options is important.

Of course, what happens if the price of POLYCUB goes from 15 cents to 60 cents? What does that do to the ROI? Suddenly it is crushing what is available on Splinterlands.

This is what each person has to decide. What is best for him or her? Risk tolerance is something we all need to understand about ourselves. Some are willing to roll the dice, others are not.

Posted Using LeoFinance Beta

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Yes there is always the risk of impermanent loss, when liquidity providing, its for some people not all.

Posted using LasseCash

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Well, if everything is exactly the opposite, I don’t want to give examples)

Posted Using LeoFinance Beta

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True, I have some Polycub, but I prefer Splintershards… That’s just a matter of faith.

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I agree and it just isn't for me because I also like the simplicity. The returns over in the Splinterlands SPS pool s more stable and I don't have to worry about things like gas fees, harvest penalties, or anything.

Trading volume, price of PolyCUB, and a lot of other factors just aren't guaranteed and that just isn't that appealing to me.

Posted Using LeoFinance Beta

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LasseCash pool pays 40000% right now LOL... no fees for enter or exit, instant liquidity! https://www.lassecash.com/@lasseehlers/lassecash-pool-pays-now-40000-per-year

Posted using LasseCash

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Who's spamming here? Is this not the place for your advertisement?

Posted Using LeoFinance Beta

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We are having a debate, would you rather have 40000% or 60%??? you decide!! sherlock.

Posted using LasseCash

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With all dude respect, 60% is nothing in the cryptocurrency markets, HEX did 10000X in 2 years... just another reason why HBDs 20% is laughable!

Posted using LasseCash

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I ask myself the same question, it seems to me that everything is already there for a quiet life, the only thing is that you need to increase the amount of staking.

Posted Using LeoFinance Beta

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No matter how simple something is what really matters is still choice, we all know what we are good for us. Some people don’t like it simple and some people like it rough

Posted Using LeoFinance Beta

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