The more risk you take, the more reward you get. And the safer you play, the less reward you get. This is a universal rule of investment which every investor should understand. It depends on the investor’s nature what type of investor he is. If he is a risk taker, he will choose high reward. But if he is a safe player, he will choose low reward.
Its very simple to understand, those who wants to take high risk they prefer hive coin and those who wants to invest in low risk coin they will prefer #HBD which is the ecosystem's stable coin. Hive have high price fluctuation which has the potential to appreciate or depreciate your wealth but HBD is a stable coin and your investment is safe all the time.
Surely, #Colony is a great token of #arcadecolony, and investing in it is a wise decision. The reason? Because it is a gaming token and it is being used in the best games on Hive like #MoonKarts, #Stakehouse, #GLG, and maybe other games. It has brighter future ahead because of the coming gaming revolution in the ecosystem.
Games are more valued in this ecosystem, We saw Splinterlands, Rising Stars, then after that #PsyberX, #Holozing, and now #arcadecolony games are rising. Users are more interested in these games and want to invest in their tokens.
So if you want to invest in #Colony or #Script token, then for you it is a great option to earn APR rewards. Meaning, on one side your investment, and on the other side you get passive income. By investing in the liquidity pool, you can get the best benefit of it.
According to users, they are getting 20–25% APR reward from this pool, which in my view is the best profit APR so far. So in such tokens, taking risk is worth it. For this, you must buy equal amount of swap.hive and colony token.
I will explain in very easy steps. First, log in to your favorite exchange. Invest in swap.hive and #colony token. For example, buy $50 swap.hive and $50 colony token.
On #Tribaldex, there is a swap option on the top. Click on it, then go to pools, click on create, so your pair comes in the liquidity pool. Now the next step is to add liquidity. For this, go to add liquidity and select the pair.
The same amount of colony token will be required equal to how much swap.hive you invest. Then click on add liquidity. Your pair is now invested in the pool, and you will keep getting daily APR profit. It depends on market situation how much APR you get, but as users say, they are getting around 20–25% APR, which is best.
In this work, surely there is risk also, and that is impermanent loss. Three scenarios can happen:
1. If swap.hive and colony price both increase together, then you get pure profit. This is win-win for you, passive income plus wealth growth.
2. If swap.hive price increases and colony does not, then impermanent loss happens. Meaning, when hive price goes up, rebalancing happens, your hive quantity decreases and colony quantity increases. So if you withdraw from the liquidity pool, you get the rebalanced quantity.
But if later hive price comes down again, or colony token goes up, the impermanent loss will end. As long as you are invested in the pool, the loss or profit is not booked. But the moment you withdraw, then you will get the effect of profit or loss.
3. If hive and colony both prices go down, then this is not impermanent loss but real value loss. In this case, you get loss from both coins. But that is temporary. If you plan to hold long-term, don’t worry about these losses, just keep earning APR.
This strategy is best for those investors who want to hold long term, because in long term both prices will rise, which will give you capital gain plus passive income.
Are you interested in liquidity pool? What did you understand from my post? Share your opinion in the comments so that I can improve in the next post.
I hope you find this post useful and informative. If you do, please remember to reblog it so that it reaches as many people as possible and that they can benefit the most from it. Also, remember to upvote, which will help me financially and grow my account.
Thank You!
Best Wishes.