LBI token is becoming more useful than as simply a buy and hold, long term investment fund with a mix of LEO and HIVE assets backing it's value. A new way to use the LBI token is being unlocked, thanks to our growing collection of liquidity pools. Let me demonstrate.
LBI can now be used as a swap token.
The liquidity pool we recently set up unlocks a new use case for LBI.
Example 1
- You have some liquid LEO
- You want to trade it for HSBIDAO
- The HSBIDAO order book is thin, and the price is above it's 0.5 HIVE value.
- It's only a small amount, but you want to swap some of your LEO earnings each day into HSBIDAO
The process becomes easier thanks to LBI. What you can do is swap the LEO you have into LBI, and then swap straight into HSBIDAO from there. LBI can be the in-between token now, giving an easier path into HSBIDAO from a range of different assets.
Example 2
- You earn CENT everyday
- You want to build your HSBIDAO position, using your CENT income.
- Swap CENT - LBI, then LBI - HSBIDAO.
Example 3
- You have a nice HSBIDAO investment
- You want to DCA each day into some SURGE
- Swap HSBIDAO daily yield - LBI, then LBI - SURGE
That's 3 ways I can think of that LBI can now be used as a "middle token" in swaps between eco-systems here on HIVE. There are obviously more, maybe turn you HSBIDAO yield each day into SWAP.BTC, or LSTR.
I know it's a little niche, but the option is now there to use LBI more transactionally, instead of just as a buy/hold investment, and come back in 5 years and see what it is worth.
How does LBI benefit from this?
There are no direct benefits for the LBI fund itself from using the token this way. Indirectly however, it is beneficial for the fund. More volume trading through our liquidity pools generates more fee income for LP's. This makes providing liquidity to these pools more appealing. Deeper liquidity makes LBI a more attractive investment, as it becomes easier to sell when the time comes thanks to deeper liquidity.
LP's definitely benefit from more trades going through the pools. Fee income (which is the invisible yield from providing liquidity) grows and becomes more relevant. The arbitrage bots keep the pool prices very well balanced, and volume flowing through one pool can lead to arb trades through other pools also, benefiting all LP's regardless of which pool they are in.
LBI becoming more useful transactionally makes it more appealing to other projects that may want to add a liquidity pool option. An LBI token that has interesting pool options and strong trade volumes becomes a good option for projects to consider. We start to move from being a project chasing partnerships into a project that is chased by others to partner with - a subtle but important shift that could unlock new opportunities.
All of this is possible thanks to those brave LBI holders that have, and continue to, provide liquidity into our various pools. This is why we dedicate 40% of our weekly income into rewarding LP's - firstly to hopefully compensate for some Impermanent Loss, and secondly to reward our most active participants with a higher ROI.
Can you think of any projects that could benefit from a liquidity pool with LBI? Hive's layer 2 can be tough, and the best way to keep things moving and successful is by different layer 2 projects working together, and building synergy. LP's and partnerships are a great way to achieve that.
Thanks for checking out this post, feel free to drop any questions, thoughts or comments below.
Cheers,
