Posted by AdEx Network on January 14th, 2021
Earlier this week we made the decision to create a new liquidity pool on Balancer for AdEx and moved the majority of the liquidity provided by our company into the new pool.
The existing, old liquidity pool had a 70/30% ADX/yUSD ratio. The new one is with a ratio of 40/60 - 40% ADX and 60% yUSD. The reason for creating is that the 60/40 ratio ensures deeper liquidity on the buy side. This benefits all of the participants and helps us maintain a more favourable and profitable ecosystem around our token.
You can find the two pools at the following addresses:
- Old liquidity pool (70/30): https://pools.balancer.exchange/#/pool/0x415900c6e18b89531e3e24c902b05c031c71a925/
- New liquidity pool (40/60): https://pools.balancer.exchange/#/pool/0x0ba1d7092ad70aaf175924ab39412d5528ef3311/
I am a liquidity provider, what should I do?
If you provide liquidity to the old pool, you don’t necessarily have to move your tokens to the new pool. However, the liquidity there is significantly lower, and therefore the opportunity for earning fees is greatly reduced.
In addition, the fee of the new pool is higher than the one of the old one - 0.3% vs. 0.2% in the old liquidity pool.
This is why we recommend that you move your assets to the new pool here.
If you are just about to enter the liquidity providing game, the you should go straight for the new pool.
Why should I provide liquidity?
There are a couple of major benefits to being a crypto liquidity provider. The first one is that by doing so, you earn fees. In fact, in the case of Balancer Exchange, you earn both swap fees and BAL tokens. This is a good way to get a passive income - especially if you are not staking your ADX and have them just laying around.
Further to this, participating helps liquidity providers continuously rebalance their asset and thus enhance their portfolio management.
Then there is the option for participating in yield farming, as was the case with the AdEx farm in December.
Last but not least, the more liquidity there is on a certain market, the more stable that market is - liquid markets are not that easy to influence by large trades. Ultimately that leads to a more sustainable cryptocurrency landscape.
Keep in mind that there are certain risks associated with becoming a liquidity provider - we’ve written about them in this blog post. Make sure to understand the risk well before adding your tokens to a liquidity pool.