1. What is liquidity?
Liquidity refers to the ease with which an asset is bought or sold in the market without affecting its market price. A crypto asset with high liquidity is understood as users can buy and sell in large quantities quickly without fear of excessive slippage (price changes in an adverse direction compared to the market price at that time).
2. What is Pool?
A pool is a collection of 2 types of assets in a trading pair that is provided by users on the exchange. People who contribute their crypto assets to create a liquidity pool will enjoy a certain rate of interest when other users exchange the 2 assets they offer.
3. What is Remitano Liquidity?
Remitano Liquidity is a product where you can earn passive income by adding liquidity to the pool. There are two tokens in each pool, you can choose to add a coin-coin or coin-fiat pair (VND/NGN/MYR/INR/…). Liquidity product aims to provide the best prices for trading pairs on the exchange and reduce slippage when you buy/sell coins in large quantities.
4. Where does the passive income come from?
Those who provide liquidity to the pool will receive a share of the income of the fee earned by Remitano on Swap transactions arising from the pool.
5. Is there a cost to add or remove liquidity?
Add/Remove liquidity in the pool easily, quickly, flexibly, and completely for free.
6. Is the APR (Annual percentage rate) a fixed number?
The percentage of annual profit you actually receive may differ from the number shown on the interface in the "All Pools" section because it will depend on the price range scale you set when adding liquidity to the pool.
7. What is Pool's support price zone? How does it affect profits?
When you add liquidity to the pool, it will be required to set the "Minimum Price" and "Maximum Price" of the exchange rate of the asset pairs you add to the pool. The price range between "Minimum Price" and "Maximum Price" is called "Support Zone". The smaller this "Support Zone", the higher the annual profit you can get and vice versa.
However, it could be risky if the coin price slips out of your Support Zone of the asset pair you are adding to the pool, then you will no longer receive profits from that pool. That is, the market price must be between the Minimum Price and the Maximum Price (Min Price <= Support Zone >= Max Price) so that you are eligible to receive profits.
If the coin price in the market slips from the Support Zone, you have 2 choices: (1) remove the liquidity for that asset pair, adjust the Price Range Scale and add liquidity back; (2) wait until the market price of the asset pair in that Pool returns to the Support Zone to continue receiving profits from the pool.
8. Does add Liquidity coins into the pool a risk-free activity?
Impermanent loss is a risk that liquidity providers face. This is the decrease in cryptocurrency value between the time you add liquidity and the time you remove liquidity. This loss only occurs when the exchange rate between the two assets added to the pool changes between these two times.
In fact, Impermanent losses can often be offset by the trading fees you share from the pool while still making a profit. However, you should be aware that providing liquidity to the pool is not a risk-free investment with a guaranteed return on capital.