Why take the extra risk of liquidity pools, if the alternative is already outstanding?
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.
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...
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!
Posted Using LeoFinance Beta