In the realm of cryptocurrency investment, a less discussed but potent strategy awaits investors who are navigating the plethora of assets available for purchase. Especially those savvy with DeFi Liquidity Providing.
LP First, Think Later
This strategy, aptly titled "LP First, Think Later" is for those deciding between different cryptocurrencies to buy. It is very simple, you add your new funds to an LP pool with your desired assets before buying the singular token.
By allocating your funds into liquidity pools with the cryptocurrencies you want to purchase, you not only gain price exposure but also secure an income stream while you finalize your decision. This income is based off the trading fees earned and any extra incentives the DEX offers.
This method has been made easier with protocols like phux.io, which offer liquidity pools composed of a variety of assets rather than the traditional two. Also, your exposure to impermanent loss is decreased with more assets in a single pool!
Now you have exposure to the coins you are considering to buy and earning income on the side! Once you have made a decision on which singular asset you want, it's a straightforward process to withdraw from the liquidity pool and acquire the chosen asset.
"LP First, Think Later" permits investors to delve into the volatile cryptocurrency market dynamics without hastening their investment choices.
Equally Effective with Stable Coin Pools
You can even use the method while waiting to put cash into the crypto market! By placing your coins in a pool only composed of stable coins, you can earn yield on your cash while you wait for the right entry. This offers a judicious pathway for investors, facilitating the growth of their earnings even as they sift through their investment options.
In essence, integrating liquidity pools into your cryptocurrency investment strategy can be a powerful move, granting you with a safety net and a prospective income avenue while you delineate your investment trajectory.
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