Deep Liquidities Lower Yields - People May Not Realize The Opportunity Cost of polycub and cubfinance pools.
I know, it's difficult for people to find value in what has gone through phases of price actions bleeding out a lot, but there are two things to consider;
- It could blow up at some point
- It could burn down to ashes
Either of them awaits at the end of the tunnel, but let's look at it from an investment standpoint;
- There's a cost
- There's a decision
- There's value generation
- There are risk reactions - price decline following market trends.
The cost here simply represents how much is required to participate, typically this is a few dollars but can range up when a decision is made.
The decision, if it is a decision to participate, will usually have the question of how much. This has a direct influence on how much can be lost in cases of bad market trends or the potential profit rate.
Value generation simply takes into account the nature of the products one is investing in. These as with polycub and cubfinance has to do with what pools one decides to be a liquidity provider.
The risk reaction? Well, that can just screw everything up, take for example one earns the most coins but the value depreciates as the day goes by.
DeFi Yields - Deceptive most times, but here's the gist.
DeFi protocols often allocate high yields to newly created pools in an attempt to drive in Liquidity and then it would just drop drastically until certain participants see a need to sell off their positions.
For protocols that charge these transactions, this could be highly beneficial for long-term investors.
Cracking the fee-income structure is key.
When you look at Binance, you shouldn't want to believe their biggest income stream is from partnering with companies or directly investing in them, no, unless traders are created in the process, it doesn't play anything close to the lead role in income stream.
Fees, the fuckin trading fee.
That's the biggest pot, and with decentralized finance, if most of the volume observed in centralized exchanges were to hit protocols that use that value to enrich the invested, we all know what would happen.
Incentives from liquidity pools can be great, but the initial bags are always more important. Polycub and cub are trading at crazy lows, and so is Leo, with more structures built around it, there's only one way to see things provided the ball is played right.
Lots of cub tokens are being burned daily, this is reducing the supply and creating an indirect impact on the market as supply keeps decreasing.
@leomarkettalk keeps adding liquidity to the pools, this somewhat ensures the protocol keeps getting an inflow of value from time to time, in an event of polycub and cub finding sustainable price patterns, the growth from there would be exponential.
Maybe the overcollateralized loans will do the trick? This would also suck up the token supply, leaving the market with little against a giant pile of pair assets to buy polycub and cubs from.
What benefits would that pose? For investors, it's obvious, for the protocol? Same thing. High volume traded equals high fees accumulated and that benefits everyone.
Where all this would boil down to would be how much one holds, the opportunity cost would be a tough one if missed, but well, all odds considered, we can only build and hope for the best.
Curious to see how things work out.
Posted Using LeoFinance Beta