DeFi Liquidity Pools Idea
Since I am getting ETH rewards from Publish0x (another bloggin platforms that rewards you in ETH, BAT, LRC tokens), I have been thinking about getting back on liquidity pools.
ETH gas fees are enormous these days, ETH rewards from Publish0x won't cover the whole gas fee but I think it will cover most of it.
And of course I am going to use Zapper.fi to add liquidity into the pool so that it is easy one click zap-in and it will save me some gas fees too.
1 click zap-in 👇
Anybody can a liquidity provider. Just deposit liquidity in to a pool, liquidity providers will receive trading fees. For example, if you add liquidity into ETH/DAI pool, you will need to deposit ETH and DAI into the pool. When someone trades ETH <-> DAI, trading fee is collected by the platform and then distributed to the liquidity providers.
But the question is which LP (liquidity pool) to pick? There are so many pools out there that give you all kinds of incentives or high returns. Everything looks pretty good and shiny at a glance. It is very hard to pick one. Especially the good one 😞
I have couple of options but I am thinking this one first.
WBTC / renBTC pool
WBTC and renBTC are both Ethereum version of BTC and 1:1 ratio. (1 WBTC = 1 BTC, 1 renBTC = 1 BTC)
A Versatile Decentralized, Trustless, and Permissionless Custodian
The easiest way to imagine RenVM is to first think of a trustless custodian that holds your digital assets as they move between blockchains. You give BTC to RenVM, it holds that BTC, and it mints that BTC as an ERC20 (a.k.a. renBTC) on Ethereum with 1:1 ratio to ensure your renBTC is always backed by the same amount of BTC.
Let’s look at an existing model that is similar: WBTC.
Under the hood, there is little technical similarity between WBTC and RenVM, but visualizing WBTC can help in understanding RenVM. With WBTC, a qualified entity gives BTC to BitGo, a centralized custodian. They hold it in cold storage, keep track of the cumulative balance received, and then create a 1:1 representation of that BTC on the Ethereum blockchain as an ERC-20 (a.k.a. WBTC). It’s then provided to merchants to sell WBTC on the open market. In general they take BTC, store it, and mint 1:1 WBTC on the Ethereum blockchain.
So I think it is "safer?" than other pools and providing liquidity into this pool will collect trading fees and if BTC price goes up, it will be a sweet icing on the cake?!
Liquid providers will receive Balancer token on top of that so this seems like a good pool.
This idea is kind of similar to earning BTC interest on BlockiFi or other lending platforms. But BTC interest on BlockFi is 6% and it is a compound interest which is pretty good but I am hoping that WBTC / renBTC pool will return more because of the incentive and everything.
This pool seems to be more stable and less risky, less maintenance so it might not be a huge return compare to other unautidited risky pools, but I think I can stay in this pool for a long time.
Do you have other LPs that you like? Which ones would you recommend?
Get Rewarded For Browsing! Are you Brave?