77.67% APR on SPS - SWAP.HIVE - My first steps with liquidity pools on Tribaldex (2022.10.03)

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Yesterday (on 2022.10.02) I started this with a very little amount of Hive and of SPS, but I am slowly increasing it. I currently have a liquidity position worth of $0.41 USD, and a pending reward of 0.005 SPS. I am just merely testing this.

Currently I really do not understand how this works. I hope that it is not very risky. I do not really want to risk much bigger amount of money.

I know that both of these cryptocurrencies has their own risks, because unlike the Hive Dollar (HBD), none of these (SPS, Hive) are stablecoins. They can quickly move up and down in value.

I currently have 0.421 SWAP.HIVE and 2.895 SPS (1.058 Share) in the SWAP.HIVE:SPS pool.

So am I became a liquidity provider by doing this (holding this position)? What does this exactly mean? How am I helping the Splinterlands economy? Somehow I am helping, because I am receiving claimable rewards, but currently I do not really understand the concept of liquidity, and whether this is a high risk investment or not.

I would be happy for an easy-to-understand short description about what I am currently doing. Thank you.

Have a nice day. All the best. Greetings and much love from Hungary.

hive-167922 hive blockchain cryptocurrency sps spt investing money finance liquiditypools
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9 comments
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Its a good one bro. I keep stacking into the dec:hive.swap one. Theyre relatively stable and payout consistently. Keep stackin it if you can.

!LOL
!PGM

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remaining commands 3

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Its interest rate is very good nowadays. I keep increasing my position in the SWAP.HIVE:SPS pool. I just currently do not understand the concept and the risks of these liquidity pools.

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You can take it out relatively quick. Its all a bit risky inherently. Libertycrypto did a good overview of the pools if you ever swing by his posts. I think youre ok man. Right now all prices kind of low. Surely can go lower but i think theyre a safe spot for now.

!LUV

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I checked his post about this. Now I understand it somewhat better. So liquidity pools let people exchange (swap/convert) two tokens without having to use an actual exchange, and the liquidity providers are earning rewards from the fees generated by the pool, and the fees are paid by the users, who use the pool to convert (swap) one token into another.

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yes, that's how that works.

The pools shown on splinterlands.com get extra rewards in form of airdrops. That's what you can claim there.

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i just put 10$ on voucher/swaphive to see how it is working.

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