Although the cryptocurrency market has been hot and rising in value, the demand for certain assets and liquidity has surged. At the same time, countless cryptocurrency supporters chase considerable returns by looking for liquidity pools with huge profits. Nowadays, certain decentralized financial (defi) applications can, in some cases, have an annual return on investment of as high as 100-400%, depending on the applications utilized.
Cryptocurrency liquidity pools are growing
According to defipulse statistics, in the past year and a half, the development of decentralized finance (defi) has become more robust. Today, the total value of defi applications has been locked at US$46.24 billion. Although digital currencies such as Bitcoin (BTC), Ethereum (ETH) and many other encrypted assets have achieved significant gains, people have also reaped substantial returns by providing liquidity. In addition, thanks to Web3 wallets such as Metamask, providing liquidity without having to trade with a centralized third party is the key to decentralized finance.
Last month, Bitcoin.com reported cryptocurrency gains compared to traditional savings accounts. The report points out how people use various centralized and decentralized applications to earn up to 17% of their income each year. 17% is a good return and is much higher than the bank’s interest rate (0.50% to 0.66%), but there are other cryptocurrency applications that have higher yields.
The following article explains how to use defi apps like Badger DAO (app.badger.finance) and Decentralized Commodity Exchange (Demex-app.dem.exchange) to get up to 400% return.
It should be known that the APR recorded on Badger, Demex and many other Defi apps (such as Sushiswap and Uniswap) provides ROI for liquidity providers, but the APR is only an estimate. The annual return on investment can vary indefinitely, depending on the weight of the pool and the fluctuation of cryptocurrency prices. In addition, there are other risks. For example, if the price of Ethereum (ETH) plummets in theory, it may cause losses. Before attempting to use the Defi application, it must be reviewed, and a large number of documents about these platforms have been widely distributed on the Internet.
Switcheo’s decentralized commodity exchange
By leveraging the pool on the Demex application located on Switcho Tradehub, the first platform that provides a substantial ROI can be found. Currently, without any commitment period, liquidity providers can use the NNEO/ETH pool to obtain 228% of revenue. Other top pools include USDC/WBTC pool (APR 113%), USDC/SWTH (APR 101%) and ETH/SWTH (APR 79.9%).
These annual percentages may fluctuate based on pool size and reward weight. One of the disadvantages of using Demex includes the current Ethereum (ETH) transaction fees, and the trading platform requires an initial transaction to connect the wallet of the token owner to the decentralized exchange. Today, the Demex pool quote shows that a 30-day commitment to the NNEO/ETH pool can provide approximately 391% of revenue. However, the APR on Demex and most other decentralized exchange (dex) platforms fluctuates and cannot be guaranteed to remain unchanged.
For those who are not accustomed to Ethereum (ETH) contract interaction fees, the cost of connecting to app.dem.exchange (Demex) and then loading the platform wallet may be expensive. One can easily connect to Demex via Metamask, Ledger Wallet or encryption key. Due to Ethereum fees and contract interaction costs, the connection fee for using Demex for the first time can be daunting.
In order to connect with Demex on March 13, 2021, gwei’s gasoline price is $133 or $93.22, just for secure communication with decentralized exchanges. Depositing funds into Demex will also incur an Ethereum network processing fee for each transaction. Obviously, ETH network fees run counter to the total return on investment and should be taken into consideration when calculating returns.
After the connection is established, the person can decide which pool to use, and they need to figure out how many pools there are in each pair of pools they need to provide. For example, the NNEO/ETH pool is 50% to 50%, which means that if you want to add $1000 worth of ETH, you also need to add $1000 worth of NNEO. The liquidity pool of ETH/SWTH is 80% ETH and 20% SWTH, so if individuals choose to increase ETH by $1000, they also need to increase SWTH by $200.
The submission duration will also increase the APR, and if the individual locks in for 30 days, the ROI rate will increase even more. Currently, Demex provides liquidity pairs of ETH, USDC, NNEO, SWTH, WBTC, CEL, NEX and other currency pairs. However, the APR for some liquidity pairs is zero because there is no liquidity in these pools.
Demex was initiated by the switcheo (SWTH) team and announced in May 2020. The Demex ecosystem has a management agreement. The platform is non-custodial and does not hold user funds. The system has its own native wallet infrastructure, which can be connected to wallets such as Metamask. The platform provides mnemonic seeds.
ger DAO and Bitcoin-centric SETT
Another platform that can be used for a large number of APRs is Badger DAO, which is a defi platform centered on BTC. With the help of the local badge token (BADGER) and DIGG, the decentralized financial application Badger DAO has made great progress.
The non-custodial DIGG token is a synthesis of Bitcoin (BTC) based on the flexible supply of BTC floating prices. ger DAO also has an automatic deaggregator system called “SETT”, which is similar to the Year Finance model. Using the Badger defi app, one can capture APR using a BTC-centric decentralized exchange model. ger is also connected with Sushiswap, Uniswap and Curve.fi.
Similar to Demex, individuals using Badger DAO can earn annual ROI by providing liquidity. The Badger defi app supports ETH, WBTC, BADGER, DIGG, WETH and tokenized BTC products from Curve.fi. Currently, the most advanced SETT library pairs are DIGG (130%), BADGER (13.76%) and WBTC/DIGG (180%).
Just like countless defi apps, the Badger DAO app can be used with wallets like Metamask. In addition, the project also has a governance system managed by the BADGER owners and the DAO community.
The project also provides a comprehensive overview of the documentation to help people understand how to use Badger DAO to get benefits.
There are many other defi applications, such as Sushiswap, Uniswap, Curve, Balancer, Bancor, Kyber Network, and many more applications that provide above-average liquidity returns. First, some of these defi applications can be confusing, so due diligence must be done when researching these platforms.
The Ethereum contract interaction fee can also be daunting. Individuals can use applications such as Uniswap, and the transaction fails but still has to pay for gas. Although there are obstacles to the learning process and ETH fees, the return on investment of these pools is still very impressive. The APR in the decentralized liquidity pool is just another nail in the coffin of financial practitioners.
What do you think of the liquidity pool and estimated APR provided by some of these defi applications? Let us know your thoughts on this topic in the comments section below.
Picture Credits: Shutterstock, Pixabay, Wiki Commons, defipulse.com, Defi logo, Badger DAO, Demex,
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