create account

How do liquidity pools work? by achim03

View this thread on: hive.blogpeakd.comecency.com
· @achim03 ·
$13.28
How do liquidity pools work?
![How do liquidity pools work.jpg](https://files.peakd.com/file/peakd-hive/achim03/23wBfnkm1mPMYQybLNw6qNznkjyURwtTAT7XPDZRvGAQujV9gtKuYqPXYEafPKzP6Kwsh.jpg)



Basically a liquidity pool takes two tokens and pairs them to create a market. We have token A and token B. At the creation of the pool exactly 50% of value of token A and 50% of value of token B need to be added as liquidity to the pool. If after the pool creation, somebody swaps A to get B, we will see more tokens A in the pool than tokens B. However, the value of each token remains the same. In other words, token B will have gained value and token A will have lost value. This is not that easy to explain with words. So let's take this illustration:


![Swap.jpg](https://files.peakd.com/file/peakd-hive/achim03/243qa7sjytxcz88EE9Yz87Pf5vHRjyg1xhcSQwRzT48dD5hvJqDTUUnun3mAayvCweCZW.jpg)


After the swap we have more token A than before and less token B. Both tokens are still worth 50% of the value however. There are more tokens A for the same value and therefore the value of A went down. There are less tokens B for the same value and therefore the value of B went up.

With each transaction, things are recalculated and that's how at any time a liquidity pool can give a price to a token in respect to its paired token. This is actually such a big step forward from the traditional order book market where you could sell your title only if there was a buyer for the title. In addition to that, the price to buy and sell are the same. There is no spread other than the fee that for each pool is predefined. With traditional order books, you had to pay the spread and in addition to that fees that were added by the broker also called courtage. 
  

## The variables of liquidity pools
To understand liquidity pools better, it's important to look at what differentiates them. Of course we first to have to look at the tokens that are combined. You can have two stable coins paired. One stable coin and one volatile coin or two volatile coins. The look for the perfect pair of tokens is the most important factor when using liquidity pools. 

## Size of the liquidity
An important factor is how much liquidity is in a pool. When you want to swap tokens, it is very important to have a high liquidity. The more the better. With little liquidity, your swap can provoke a big change of price, also called slippage. If for example you have a pool with 10$ SOL and 10$ USDC, when you want to swap 5$ you will change the price dramatically and you will get a very bad change. If you have a pool with 100'000 $ of each token, your swap will have a minimal impact on the price and your exchange will be very close to market prices. 

However, if you want to provide liquidity it is also important that there is not too much liquidity involved. The more liquidity, the more the fees will be spread among the liquidity providers. 

## Fees
Another important aspect are the fees that are deducted from each swap. These fees normally go in majority to the liquidity providers. For the person who swaps, little fees are an advantage but for somebody providing liquidity maybe a bit higher fees wouldn't be bad. What we should keep in mind is that very high fees will reduce the quantity of transactions. People will want to pay as little as possible for transacting and if the fees are too high, there will be less transactions and therefore few fees for liquidity providers. 

## The blockchain
It really matters where your liquidity pool is located. When providing liquidity or swapping tokens, you will need to pay network fees and there are big differences between the blockchains. Etherum is known for its high fees. Other chains like SUI or Solana have much lower fees. For swapping and providing liquidity its best to opt for chains with low fees.
 
## The transaction volume
The quantity of transactions matters mainly if you want to provide liquidity. The more transactions, the more fees you will generate. When you need to chose, always go for the pool with more transactions.

## The return
On the different platforms, you often get an indication of the return that you can expect in pools. This is often calculated on a historic basis over the last days and it can't be taken as guarantee for further returns. It's important to understand that on some platforms you get ab indication on the return per 24h and on others on a yearly return. 


## Concentrated vs normal liquidity pools
Most modern platforms offer nowadays the concept of concentrated liquidity pools. In the next post, I will explain the difference between a normal and a concentrated liquidity pool. 

<hr>
With @ph1102, I'm running the @liotes project. 

Please consider supporting our Witness nodes:
- [Liotes Hive Witness](https://vote.hive.uno/@liotes)
- [Liotes Hive-Enginge Witness](https://tribaldex.com/witnesses)
👍  , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , and 260 others
properties (23)
authorachim03
permlinkhow-do-liquidity-pools-work
categorytribes
json_metadata{"app":"peakd/2025.1.3","format":"markdown","tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"users":["ph1102","liotes"],"image":["https://files.peakd.com/file/peakd-hive/achim03/23wBfnkm1mPMYQybLNw6qNznkjyURwtTAT7XPDZRvGAQujV9gtKuYqPXYEafPKzP6Kwsh.jpg","https://files.peakd.com/file/peakd-hive/achim03/243qa7sjytxcz88EE9Yz87Pf5vHRjyg1xhcSQwRzT48dD5hvJqDTUUnun3mAayvCweCZW.jpg"]}
created2025-02-04 10:38:48
last_update2025-02-04 10:38:48
depth0
children34
last_payout2025-02-11 10:38:48
cashout_time1969-12-31 23:59:59
total_payout_value6.666 HBD
curator_payout_value6.615 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length4,859
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,545,040
net_rshares32,280,300,227,821
author_curate_reward""
vote details (324)
@aliveandthriving ·
$0.04
Great information on liquidity pools @achim03 wishing you a successful week ahead
![](https://i.imgur.com/SbTx1Eb.png)
*Made in Canva*
!ALIVE 

![](https://i.imgur.com/DpjlHhR.jpeg) - @benthomaswwd - Moderator
___
*This post has been curated by the Alive And Thriving Team, we curate good content in the [We Are Alive Tribe](https://wearealiveand.social/) that is on topic for #aliveandthriving, and it's included in our daily curation report on @aliveandthriving, plus @youarealive is following our Curation Trail.*
👍  
properties (23)
authoraliveandthriving
permlinkre-achim03-sr5sdq
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":["https://i.imgur.com/SbTx1Eb.png","https://i.imgur.com/DpjlHhR.jpeg"],"users":["achim03","benthomaswwd","aliveandthriving","youarealive"]}
created2025-02-04 12:37:03
last_update2025-02-04 12:37:03
depth1
children1
last_payout2025-02-11 12:37:03
cashout_time1969-12-31 23:59:59
total_payout_value0.020 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length516
author_reputation60,183,278,227,347
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,547,210
net_rshares106,410,916,154
author_curate_reward""
vote details (1)
@achim03 ·
Thanks for the curation!
properties (22)
authorachim03
permlinkre-aliveandthriving-sr62wc
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 16:24:12
last_update2025-02-04 16:24:12
depth2
children0
last_payout2025-02-11 16:24:12
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length24
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,305
net_rshares0
@blitzzzz ·
$0.04
Even having been exposed to liquidity pools for quite some time, the idea of impermanent losses still confound me, but of course, the problem only really sets in when those impermanent losses actually become permanent! 💸
👍  ,
properties (23)
authorblitzzzz
permlinkre-achim03-sr5vzh
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-04 13:54:57
last_update2025-02-04 13:54:57
depth1
children1
last_payout2025-02-11 13:54:57
cashout_time1969-12-31 23:59:59
total_payout_value0.021 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length220
author_reputation589,506,126,459,467
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,548,853
net_rshares106,684,619,398
author_curate_reward""
vote details (2)
@achim03 ·
The concept of impermanent loss is actually not as complicated as it is often shown. Basically you compare the situation by holding both tokens in you wallet with the situation with both tokens in the pool. If both tokens evolve in parallel, in the second situation you don't make any losses. However when both tokens don't evolve at the same speed, having them in the pool will leave you with less value than if you have both tokens in the wallet :-)
properties (22)
authorachim03
permlinkre-blitzzzz-sr62v9
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 16:23:33
last_update2025-02-04 16:23:33
depth2
children0
last_payout2025-02-11 16:23:33
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length451
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,297
net_rshares0
@cursephantom ·
$0.04
More information about LP... Noted! 🗒️

Ty for the information~

!ALIVE
!PIZZA
👍  
properties (23)
authorcursephantom
permlinkre-achim03-202524t221740963z
categorytribes
json_metadata{"tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/4.0.2-vision","format":"markdown+html"}
created2025-02-04 15:17:42
last_update2025-02-04 15:17:42
depth1
children1
last_payout2025-02-11 15:17:42
cashout_time1969-12-31 23:59:59
total_payout_value0.020 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length78
author_reputation115,166,376,489,757
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,550,985
net_rshares106,877,271,194
author_curate_reward""
vote details (1)
@achim03 ·
You are welcome and thanks for stopping by :-)
👍  
properties (23)
authorachim03
permlinkre-cursephantom-sr62pv
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 16:20:18
last_update2025-02-04 16:20:18
depth2
children0
last_payout2025-02-11 16:20:18
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length46
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,235
net_rshares2,141,778,940
author_curate_reward""
vote details (1)
@djbravo ·
$0.03
I have also joined something like this where things are put in and getting some profit every month but when prices are higher the quantity is reduced and calculated if  Both things are running equally. 
👍  
properties (23)
authordjbravo
permlinkre-achim03-202524t193550816z
categorytribes
json_metadata{"tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/4.0.2-vision","format":"markdown+html"}
created2025-02-04 14:35:51
last_update2025-02-04 14:35:51
depth1
children0
last_payout2025-02-11 14:35:51
cashout_time1969-12-31 23:59:59
total_payout_value0.012 HBD
curator_payout_value0.013 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length202
author_reputation363,872,420,951,845
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,549,933
net_rshares65,489,659,066
author_curate_reward""
vote details (1)
@doombot75 ·
$0.04
Well written explanation, thanks, makes it all a bit clearer for me
!BBH
👍  
properties (23)
authordoombot75
permlinkre-achim03-sr62sl
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-04 16:21:57
last_update2025-02-04 16:21:57
depth1
children1
last_payout2025-02-11 16:21:57
cashout_time1969-12-31 23:59:59
total_payout_value0.020 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length72
author_reputation15,243,201,538,485
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,266
net_rshares106,219,196,602
author_curate_reward""
vote details (1)
@achim03 ·
I'm happy to hear that. Thanks for stopping by!
properties (22)
authorachim03
permlinkre-doombot75-sr62yv
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-04 16:25:42
last_update2025-02-04 16:25:42
depth2
children0
last_payout2025-02-11 16:25:42
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length47
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,333
net_rshares0
@edgerik ·
$0.05
Now I understand better how liquidity pools work, thank you for the explanation.

!BBH
!WINE
👍  
properties (23)
authoredgerik
permlinkre-achim03-202524t201230572z
categorytribes
json_metadata{"tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/3.2.0-vision","format":"markdown+html"}
created2025-02-05 00:12:33
last_update2025-02-05 00:12:33
depth1
children1
last_payout2025-02-12 00:12:33
cashout_time1969-12-31 23:59:59
total_payout_value0.026 HBD
curator_payout_value0.027 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length92
author_reputation118,632,641,382,043
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,561,856
net_rshares133,272,487,590
author_curate_reward""
vote details (1)
@achim03 ·
I'm happy you found it useful. Thanks for stopping by!
properties (22)
authorachim03
permlinkre-edgerik-sr7bs3
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-05 08:33:39
last_update2025-02-05 08:33:39
depth2
children0
last_payout2025-02-12 08:33:39
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length54
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,567,485
net_rshares0
@hive-lu ·
#### Hello achim03!
**It's nice to let you know that your article will take 9th place.**
Your post is among **15 Best** articles voted 7 days ago by the @hive-lu | King Lucoin Curator by **keithtaylor**
 
You receive 🎖 **0.7** unique **LUBEST** tokens as a reward. You can support Lu world and your curator, then he and you will receive 10x more of the winning token. There is a buyout offer waiting for him on the stock exchange. All you need to do is reblog [Daily Report 565](/lucoin/@hive-lu/daily-report-day-565) with your winnings.
 
<center>[![2.png](https://files.peakd.com/file/peakd-hive/now.calendars/23uEwt7Djmb4N3dE96ecCUemJez6vLU3fmoTrdjEJn1ws4d8iPw2QrrsB22nyhbb178sx.png)](/@hive-lu)</center>
 
---
<center><sub>Invest in the **Lu token** (Lucoin) and get paid. With 50 Lu in your wallet, you also become the curator of the @hive-lu which follows your upvote.
Buy Lu on the [Hive-Engine](https://hive-engine.com/trade/LU) exchange | World of Lu created by <a href="/@szejq">szejq</a> </sub></center>
<center><sub>_If you no longer want to receive notifications, reply to this comment with the word_ `STOP` _or to resume write a word_ `START`</sub> </center>
properties (22)
authorhive-lu
permlinklucoin-prize-r77wyx
categorytribes
json_metadata""
created2025-02-12 03:36:33
last_update2025-02-12 03:36:33
depth1
children0
last_payout2025-02-19 03:36:33
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length1,185
author_reputation32,196,547,618,999
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,732,363
net_rshares0
@incublus ·
$0.06
We need more detailed posts like this, man, because it's a difficult subject to understand. At least it's impossible for a person who hasn't been on web3 before to understand it. 
👍  
properties (23)
authorincublus
permlinkre-achim03-202525t1252674z
categorytribes
json_metadata{"tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/4.0.2-vision","format":"markdown+html"}
created2025-02-05 09:05:27
last_update2025-02-05 09:05:27
depth1
children2
last_payout2025-02-12 09:05:27
cashout_time1969-12-31 23:59:59
total_payout_value0.030 HBD
curator_payout_value0.031 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length179
author_reputation996,663,255,732,075
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,567,893
net_rshares153,065,233,445
author_curate_reward""
vote details (1)
@achim03 ·
I've put a lot of hours in trying to understand how these things work. It's an amazing technology that is worth to explain in detail. I will try to make some more posts about the subject :-)
properties (22)
authorachim03
permlinkre-incublus-sr7e53
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-05 09:24:39
last_update2025-02-05 09:24:39
depth2
children1
last_payout2025-02-12 09:24:39
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length190
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,568,116
net_rshares0
@incublus ·
I'll read them too man, I want to understand it fully 
properties (22)
authorincublus
permlinkre-achim03-202525t12516961z
categorytribes
json_metadata{"tags":["tribes"],"app":"ecency/4.0.2-vision","format":"markdown+html"}
created2025-02-05 09:51:06
last_update2025-02-05 09:51:06
depth3
children0
last_payout2025-02-12 09:51:06
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length54
author_reputation996,663,255,732,075
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,568,501
net_rshares0
@indiaunited ·
$0.02
Indiaunited Curation 1738675399368
This post has been manually curated by @steemflow from Indiaunited community. Join us on our [Discord Server](https://discord.gg/bGmS2tE). 

Do you know that you can earn a passive income by delegating to @indiaunited. We share more than 100 % of the curation rewards with the delegators in the form of IUC tokens. HP delegators and IUC token holders also get upto 20% additional vote weight. 

Here are some handy links for delegations: [100HP](https://hivesigner.com/sign/delegateVestingShares?delegator=&delegatee=indiaunited&vesting_shares=168800.41401589898%20VESTS), [250HP](https://hivesigner.com/sign/delegateVestingShares?delegator=&delegatee=indiaunited&vesting_shares=422001.0350397474%20VESTS), [500HP](https://hivesigner.com/sign/delegateVestingShares?delegator=&delegatee=indiaunited&vesting_shares=844002.0700794948%20VESTS), [1000HP](https://hivesigner.com/sign/delegateVestingShares?delegator=&delegatee=indiaunited&vesting_shares=1688004.1401589897%20VESTS). 

[![image.png](https://files.peakd.com/file/peakd-hive/bala41288/46eaz12N-image.png)](https://discord.gg/bGmS2tE) 

<sub>**100% of the rewards from this comment goes to the curator for their manual curation efforts. Please encourage the curator @steemflow by upvoting this comment and support the community by voting the posts made by @indiaunited.**</sub>
👍  
properties (23)
authorindiaunited
permlinkindiaunited-1738675399368
categorytribes
json_metadata{"app":"hiveblog/0.1","format":"markdown","tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"]}
created2025-02-04 13:23:18
last_update2025-02-04 13:23:18
depth1
children1
last_payout2025-02-11 13:23:18
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length1,334
author_reputation98,438,551,327,822
root_title"How do liquidity pools work?"
beneficiaries
0.
accountsteemflow
weight10,000
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,548,160
net_rshares106,512,609,374
author_curate_reward""
vote details (1)
@achim03 ·
Thanks for the curation!
properties (22)
authorachim03
permlinkre-indiaunited-sr62w6
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 16:24:06
last_update2025-02-04 16:24:06
depth2
children0
last_payout2025-02-11 16:24:06
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length24
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,303
net_rshares0
@jfang003 ·
$0.04
@jfang003 "It's an interesting model and I do like how it wor..."
It's an interesting model and I do like how it works. I know that diesel pools and Defi pools (in the past) can give extra rewards. Has that changed in the newer pools?
👍  
properties (23)
authorjfang003
permlinkre-achim03-2xmqdyxfa
categorytribes
json_metadata{"app":"leothreads/0.3","format":"markdown","tags":["leofinance"],"canonical_url":"https://inleo.io/threads/view/jfang003/re-achim03-2xmqdyxfa","isPoll":false,"pollOptions":{},"dimensions":[]}
created2025-02-05 06:39:30
last_update2025-02-05 06:39:30
depth1
children1
last_payout2025-02-12 06:39:30
cashout_time1969-12-31 23:59:59
total_payout_value0.022 HBD
curator_payout_value0.022 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length168
author_reputation643,697,767,439,523
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,566,151
net_rshares110,853,506,396
author_curate_reward""
vote details (1)
@achim03 ·
Rewards are another aspects of these pools. On other blockchains they call them farms and they offer quite a lot of options.
properties (22)
authorachim03
permlinkre-jfang003-sr7bv0
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-05 08:35:24
last_update2025-02-05 08:35:24
depth2
children0
last_payout2025-02-12 08:35:24
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length124
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,567,498
net_rshares0
@ladyaryastark ·
$0.06
Sorry, but how it's possible have 2 tokens with the same value... When you say 50% of A and B, that is in monetary value, not in tokens quantity?
👍  
properties (23)
authorladyaryastark
permlinkre-achim03-202524t8573287z
categorytribes
json_metadata{"type":"comment","tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/3.2.1-mobile","format":"markdown+html"}
created2025-02-04 11:57:03
last_update2025-02-04 11:57:03
depth1
children2
last_payout2025-02-11 11:57:03
cashout_time1969-12-31 23:59:59
total_payout_value0.030 HBD
curator_payout_value0.030 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length145
author_reputation36,070,128,745,201
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,546,501
net_rshares147,528,894,644
author_curate_reward""
vote details (1)
@achim03 ·
The value is most of the time expressed in $. So you would need a certain amount of tokens A with the same value in $ than the according number of token B.

Let's say you pair USDT and Hive at hive 0.33$. You would need to pair 30 Hive with one 1 USDT. 30 x 0.33 = 1.

Hope it makes sense :-)
👍  
properties (23)
authorachim03
permlinkre-ladyaryastark-sr5rle
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 12:20:03
last_update2025-02-04 12:20:03
depth2
children1
last_payout2025-02-11 12:20:03
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length292
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,546,936
net_rshares2,359,180,490
author_curate_reward""
vote details (1)
@ladyaryastark ·
Yeah, I got it now 😆 Thanks for your patience!

!INDEED
!PIZZA
properties (22)
authorladyaryastark
permlinkre-achim03-202524t9284643z
categorytribes
json_metadata{"type":"comment","tags":["tribes"],"app":"ecency/3.2.1-mobile","format":"markdown+html"}
created2025-02-04 12:28:06
last_update2025-02-04 12:28:06
depth3
children0
last_payout2025-02-11 12:28:06
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length62
author_reputation36,070,128,745,201
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,547,042
net_rshares0
@livinguktaiwan ·
$0.05
Being a crypto dummy, this really helps me to  understand the concept of liquidity pools better, thanks for that. 

One outstanding question for me, is how does the liquidity pool start off at 50/50 equal value? Say if I were to start a liquidity pool for Hive and my fictitious token LUT which is worth $0.00001,  would I have to get people to put in Hive and LUT worth equal amounts in the pool before starts to operate? Are these the liquidity providers you mentioned?
👍  
properties (23)
authorlivinguktaiwan
permlinkre-achim03-sr5pnz
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-04 11:38:21
last_update2025-02-04 11:38:21
depth1
children3
last_payout2025-02-11 11:38:21
cashout_time1969-12-31 23:59:59
total_payout_value0.025 HBD
curator_payout_value0.025 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length471
author_reputation1,676,727,609,384,048
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,546,124
net_rshares126,271,048,181
author_curate_reward""
vote details (1)
@achim03 ·
I'm happy you could learn something from the post :-).

The two tokens that you pair together need to have the same dollar value to start with. Let's take your example of Hive and LUT at LUT being worth 0.00001. 

Let's say for this example that hive is worth 0.33 $ and you want to put 100$ worth of each token as liquidity into the pool. You would therefore need to put:
100 / 0.33 hive and 100 / 0.00001 LUT -> 303 Hive and 10'000'000 LUT 
That's the ratio that you would put at the start to create the pool. It could be any multiple of it. 

Hope this answers your question :-)
👍  
properties (23)
authorachim03
permlinkre-livinguktaiwan-sr5rtt
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 12:25:06
last_update2025-02-04 12:25:06
depth2
children2
last_payout2025-02-11 12:25:06
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length581
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,547,008
net_rshares2,346,766,526
author_curate_reward""
vote details (1)
@livinguktaiwan ·
$0.04
Thanks.  What I mean is, as the person creating the liquidity pool, do I have to fund it all myself or do I get other people to put their funds the pool? 
 
But wait... ignore my question, because I think I've figured it out....

I remember when I invested in the Zing liquidity pool, which is the only one I invested in, and I had no idea what I was doing, I invested a few times in the pool, and everytime I had to put both Zing and Hive in the pool, and every time the actual amount, or the relative price of the two differed.  And when I eventually divested, it differed again.  I think it's all coming together like jigsaw puzzle now.

Look forward to the next post.  thanks!
👍  
properties (23)
authorlivinguktaiwan
permlinkre-achim03-sr5tac
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 12:56:36
last_update2025-02-04 12:56:36
depth3
children1
last_payout2025-02-11 12:56:36
cashout_time1969-12-31 23:59:59
total_payout_value0.020 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length680
author_reputation1,676,727,609,384,048
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,547,560
net_rshares106,309,324,628
author_curate_reward""
vote details (1)
@pizzabot · (edited)
RE: How do liquidity pools work?
<center>PIZZA!


$PIZZA slices delivered:
cursephantom tipped achim03 
@shiftrox<sub>(4/20)</sub> tipped @achim03 


</center>
properties (22)
authorpizzabot
permlinkre-how-do-liquidity-pools-work-20250211t134527z
categorytribes
json_metadata"{"app": "pizzabot"}"
created2025-02-11 13:45:27
last_update2025-02-11 14:02:12
depth1
children0
last_payout2025-02-18 13:45:27
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length126
author_reputation7,592,128,870,682
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,716,362
net_rshares0
@shiftrox ·
$0.06
Super interesting, I've bookmarked it so I can always look it up and read it when I need to. I learned a bit more about pools.

!PIZZA !BBH !LUV
👍  
properties (23)
authorshiftrox
permlinkre-achim03-sr65ae
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-04 17:15:54
last_update2025-02-04 17:15:54
depth1
children2
last_payout2025-02-11 17:15:54
cashout_time1969-12-31 23:59:59
total_payout_value0.030 HBD
curator_payout_value0.030 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length144
author_reputation714,144,250,206,169
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,553,595
net_rshares149,756,328,349
author_curate_reward""
vote details (1)
@achim03 ·
Happy to hear that you found it useful :-)
properties (22)
authorachim03
permlinkre-shiftrox-sr65d9
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3","image":[],"users":[]}
created2025-02-04 17:17:33
last_update2025-02-04 17:17:33
depth2
children0
last_payout2025-02-11 17:17:33
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length42
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,553,617
net_rshares0
@luvshares ·
@achim03, @shiftrox<sub>(2/5)</sub> sent you LUV. | <a
    href="https://crrdlx.on.fleek.co/" style="text-decoration:none">tools</a> | <a 
    href="https://discord.gg/K5GvNhcPqR" style="text-decoration:none">discord</a> | <a href="https://peakd.com/c/hive-159259">community </a> | <a 
    href="https://hivewiki.netlify.app" style="text-decoration:none">HiveWiki</a> | <a href="https://ichthys.netlify.app" style="text-decoration:none"><>< daily</a>



<center>Made with <a href="https://peakd.com/@luvshares" target="_blank">LUV</a> by <a href="https://hive.blog/@crrdlx" target="_blank">crrdlx</a></center>
properties (22)
authorluvshares
permlinkre-re-achim03-sr65ae-20250204t171559z
categorytribes
json_metadata"{"app": "beem/0.24.26"}"
created2025-02-04 17:16:00
last_update2025-02-04 17:16:00
depth2
children0
last_payout2025-02-11 17:16:00
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length609
author_reputation5,651,102,754,153
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,553,596
net_rshares0
@uwak ·
$0.04
Thank you for the explanation. It helps those of us who are know to understand how things work here. Thank you.
👍  
properties (23)
authoruwak
permlinkre-achim03-202524t144248178z
categorytribes
json_metadata{"type":"comment","tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/3.2.1-mobile","format":"markdown+html"}
created2025-02-04 13:42:51
last_update2025-02-04 13:42:51
depth1
children1
last_payout2025-02-11 13:42:51
cashout_time1969-12-31 23:59:59
total_payout_value0.020 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length111
author_reputation1,742,115,040,195
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,548,597
net_rshares106,615,216,766
author_curate_reward""
vote details (1)
@achim03 ·
I'm happy you found it useful :-)
properties (22)
authorachim03
permlinkre-uwak-sr62vt
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 16:23:51
last_update2025-02-04 16:23:51
depth2
children0
last_payout2025-02-11 16:23:51
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length33
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,301
net_rshares0
@yeckingo1 ·
$0.04
I understand that you are referring to entering an infinite pool because if it is limited in price then you can choose any percentage.
👍  ,
properties (23)
authoryeckingo1
permlinkre-achim03-202524t15586164z
categorytribes
json_metadata{"tags":["tribes","bbh","aliveandthriving","proofofbrain","pimp","cent","ctp"],"app":"ecency/4.0.2-vision","format":"markdown+html"}
created2025-02-04 14:58:03
last_update2025-02-04 14:58:03
depth1
children1
last_payout2025-02-11 14:58:03
cashout_time1969-12-31 23:59:59
total_payout_value0.021 HBD
curator_payout_value0.021 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length134
author_reputation168,675,610,928,200
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,550,580
net_rshares106,775,213,313
author_curate_reward""
vote details (2)
@achim03 ·
Exactly. These are traditional liquidity pools like you find them on hive. What you are referring to, I will make a post specifically about them :-)
properties (22)
authorachim03
permlinkre-yeckingo1-sr62r1
categorytribes
json_metadata{"tags":["tribes"],"app":"peakd/2025.1.3"}
created2025-02-04 16:21:00
last_update2025-02-04 16:21:00
depth2
children0
last_payout2025-02-11 16:21:00
cashout_time1969-12-31 23:59:59
total_payout_value0.000 HBD
curator_payout_value0.000 HBD
pending_payout_value0.000 HBD
promoted0.000 HBD
body_length148
author_reputation325,729,828,668,168
root_title"How do liquidity pools work?"
beneficiaries[]
max_accepted_payout1,000,000.000 HBD
percent_hbd10,000
post_id140,552,249
net_rshares0