Multiple ways that you can earn as a Liquidity Provider on Hive
DeFi on Hive came to life through TribalDex solution which enabled Liquidity Pools across a diversity of cryptocurrencies from within this ecosystem or from other blockchains. While the current solution is not acting as a truly decentralized exchange, for sure it brings market makers to this ecosystem. And with ongoing changes and features that were added in time, Liquidity Providers have multiple ways to earn by participating in the existing markets or creating new ones.
So let's see what are the ways that a Liquidity Provider can earn on Hive blockchain. The first way which was just introduced (and you can read more on Fee Structure Changes Coming to Hive-Engine) and which is an industry-standard is through Transaction fees. At this moment 100% of the fees will go to the liquidity providers, while in the future there might be explored that a portion of that to go to BEE token holders, but this seems not to be the next priority.
Another way that Liquidity Providers are incentives is through the LP rewards themselves. Some pools don't have such rewards, but most of them do in order to be appealing to users and reach enough depth to have a smaller gap between buying and selling orders. And the LP rewards are quite considerable, some of them reaching an average APR of 200% - 300% or even more in exceptional cases. I think users are still discovering the DeFi on Hive and this is why some of the pools have great returns.
The third way that Liquidity Providers earn more is through their continuous participation in the pool which is rewarded with a Daily bonus which is somewhere in between 1% - 5% from what I observed. This makes LPs participation increase over time without adding any more liquidity in the pool and being rewarded for an increased share.
Overall I think that the current DeFi solution on Hive blockchain is pretty good and it has various ways to incentivize Liquidity Providers. Being in this ecosystem ensures a passive earning by participating in a pool while benefiting the entire blockchain through increasing the liquidity and being more convenient to exchange between tokens.
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I have always advocated that Hive is one of the most suitable blockchains for De-Fi to be integrated. I'm happy with what BeeSwap and Diesel Pools bring our ecosystem.
I prioritize the stability of HBD through liquidity pools. As the LP amount increases, the De-Fi will evolve in our ecosystem ✌✌
Thanks for the insight mate, I sometimes focus more on the side of gaming and forget about the De-Fi utilities ^^
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HBD Savings and Hive DeFi are providing a passive revenue stream along with providing pool depth and balancing Hive with HBD. Two investments that anyone should get involved in.
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I don't know why but I haven't touched them and have only stuck with Kingdoms. I have always felt the tokens are best used for curating in the various tribes and why I never touched the pools. I still feel like that and maybe a decision I will regret one day who knows.
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DeFi rewards are much greater than curation and more pasive. I too like to curate, but simply cannot overlook the rewards of being a Liquidity Provider.
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Earning in different ways on Hive is another way they are unique.
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That is for sure and also not to put all the eggs in a single basket. Diversification is key in any financial endeavor.
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Thank you
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I'm excited that there are new ways to earn hive and other tokens. I just wish the rewards were verifiable in Hive Engine!
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It is now verifiable as they've added transaction history for LP Rewards. You can check them on LeoDex for the rewarded token by looking at transaction types "distribution_checkPendingDistributions".
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Oh wow thanks !
I can confirm this. It happened for me when I switched my liquidity to the SWAP.HIVE:PLN diesel pool.
During my first 2 experiences with diesel pools, the rewards never appeared on in the token history section of my wallet. SWAP.HIVE:PLN is my third diesel pool (which I've been doing one at a time for now), and this time the token history shows the rewards appearing in my wallet.
Yay! 🤗
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Does this mean if I add to the LP, I lose the bonus? xD I always thought the bonus was based on a larger contribution to the LP.
Yeah, I am not sure about that. I've done the same and I think it got reset, but I am not sure. They would need to keep each liquidity operation separately to count the bonus on each one and I think that might be a little complex for them to do. Thus, better calculate your liquidity movement upfront.
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Incentivizing LP's would be a really good look not just for tribaldex, but for Hive as a whole. I have earned some good rewards from BXT, SPS and BEE...but it would be great to see all pools well incentivized to really step things up.
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The LPs have nice incentives, but those can always be better. I feel that I wasn't in first-line when new pools were launched, maybe being early in the pool is paying more.
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Thanks for a very short but clear explanation how to incentivize liquidity providers on Hive. Just buzzed your post.
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