”Macro-scale quantitative market analysis”
T Quantitati In `tor MARCH 18, 2021
VOL.I. . . No.51
Abstract By BENJAMIN J. COWEN, PHD
BC ANALYTICS, LLC
small commission, proportional to my share of the liquidity pool anytime a trader uses that trading pair.
You have jumped into the cryptoverse! Welcome to the 51st edition of The Quantitative Investor, a weekly newsletter for those who want to dive deep into the metrics of various financial markets, with a focus on cryptocurrencies, and visualize data not often presented elsewhere. The main objectives of this newsletter are to graph key metrics, identify any trends or correlations, and present the data which will help the reader understand long-term price movements. This report is strictly not financial advice and should not be treated as such. Instead, it is focused on analyzing historical data, presenting the data in a manner which is informative, and making a few projections based on mathematics alone. The reader is still expected to do their own research when it comes to investing, especially within the cryptocurrency asset class.
One thing to consider when using liquidity pools is impermanent loss. If the demand for one of the tokens goes up a lot relative to the other token, you may actually have less of one token later on when you go to withdraw it. It is not hard to imagine a scenario where the commissions that you made do not make up for the fact that you could be slightly down in supply This week I have decided to do a more practical video where on one crypto that potentially went up 10x. I really prefer using I show you how to use the liquidity pools on Uniswap and 1inch. liquidity pools during accumulation phases because the market I have used Uniswap a lot but have never actually used 1inch so is not going crazy each and every week. you will be able to watch me at least attempt to navigate that site. Decentralized exchanges are nice to use because you do not have to trust a 3rd party with your crypto. However, one major downside to trading on the Ethereum network is the absurdly high gas fees right now due to how congested the network is.
Liquidity Pools
To use an exchange like Uniswap, I have a Metamask wallet which I connect to the exchange. From there I can buy from a long list of tokens. After I buy some DAI using my ETH, I then provide liquidity to the ETH/DAI pair. You have to provide the equivalent USD value of both coins. Now, I will earn a
When we are in a bull market, there are even more risks with providing liquidity if the demand for one of the tokens goes up a lot relative to the other one. Additionally, the gas fees on the Ethereum network are absurdly high right now, which makes add liquidity even less attractive. However, I wanted people to be aware that liquidity pools do exist and it is a way to earn more crypto on commissions.