Why do people become liquidity providers, and why should you choose Hashbon?
Until DeFi happened, people didn’t understand what it means to have custody of their assets. We had to rely on centralized exchanges like Binance to keep our money safe. However, we also have to deal with the many security risks of having our funds managed by centralized exchanges. DeFi saved us from this security risk, but DeFi wouldn’t also be possible without the help of liquidity pools. Liquidity pools are the backbone of decentralized platforms. It is a sure way of making money and not as common as other ways of earning in the crypto world.
A liquidity provider is someone that funds the liquidity pool of a decentralized platform in order to allow trading to happen. So, they are known as “trade facilitators.” For instance, if you have 1 ethereum and 1 DAI, you can put those tokens into a pool and then receive Liquidity Pool Tokens to signify that you have a stake in the pool. You are rewarded according to the amount of liquidity pool provided, which can be considered a form of passive income. In order to trade tokens on a decentralized exchange, there have to be enough token in the crypto market. That can only be possible with the amount of liquidity the token has.
How can you make money by providing liquidity? Let’s get a clear idea by using a decentralized exchange called Hashbon as an example.
Anyone can become a liquidity provider on a DEX platform like Hashbon. Hashbon was developed to change the centralized finance of crypto payment for both individuals and businesses. In 2021, Hashbon expanded to the Hashbon (FiRe) Finance Reinvented ecosystem and introduced the first-ever cross-chain decentralized exchange (CDEX) known as Hashbon Rocket.
Hasbon CDEX is designed to address the issue of interoperability in DeFi, which popular DEXes like Pancakeswap and Uniswap have been unable to solve due to the blockchain technology they are built on. While Pancakeswap runs on BSC and Uniswap EX on the Ethereum network, both have failed to incorporate the interoperable functionality, thereby obstructing the fast-paced adoption of DLT. Hashbon Rocket solves this problem and also makes it easy for liquidity providers to provide liquidity on their platform.
So why do people become liquidity providers, and why should you?
Because liquidity providers play such a key role in DEX and they cannot exist without them. Also, it’s super easy and a way to make passive income online.
On a decentralized exchange platform like Hashbon, all you have to do to become a liquidity provider is simple. Visit the Hashbon Rocket website and navigate to launch DAPP to connect your metamask account.
When you are done with that, navigate to the pool section on the platform and follow the instructions. Then Voila! You have become a liquidity provider! How easy! You are eligible to receive a cut in transaction fees that are generated by the pool. When people use a liquidity pool to make trades, they have to pay a small fee to the pool. That fee is distributed among liquidity providers proportionally.Source