In this new series, I'm writing about the possibilities to invest your crypto/money on Binance. Unlike other platforms I know, Binance offers different comfortable ways to put your eggs into a busket.
Today, I would like to introduce you to Liquid Swap.
I'm certainly sure some of you may know what Liquid Swap is and does. It's pretty much the same as Harvest.finance and all other providers does.
If not, let me explain it briefly: Nowadays, swapping one token to another has never been so easy thanks to Uniswap and 1inch. However, to provide this comfortable service, it is necessary to provide liquidity for both token pairs (like BNB-ETH). Therefore, these mentioned providers also provide a service to provide liquidity. Any user who has ETH or BNB can provide them in order to receive a small cut from fees for each swap.
And exactly this provides Binance with their Liquid Swap.
On Binance, any registered user can not only swap their coins in a comfortable way...
But also provide liquidity to this service...
So, let's talk about the benefits or, in other words, the rewards for providing liquidity to them.
Binance differs from Stable Investment and Innovative investment
- Stable Investment: As the name suggests, a more stable investment as we swap between two stable tokens
- Innovative Investment: Here, we swap between two digital tokens or fiat and the returns are fluctuating greatly
You may now conclude, what could be more profitable: Yes, it's the innovative investment.
Although, the interest rates of innovative investment changes often, the interest rate you see here might be high at few days.
For instance, the highest interest rate at Stable Investment is 4.972% with USDC/USDT pair. However, the highest interest rate at Innovative investment is 10.2273% with BNB/ETH pair.
Since I'm talking about Binance, and particularly its Binance Token. You will also receive a bonus interest on top in BNB. These are higher and ranges between 4.8% to 12.3%. These will be added on top of your standard interest.
How much I earned from Binance Liquid Swap
I already revealed this in the title, but here once again. Since my investment on 28th December 2020, I earned about $198.7539 USD from Binance Liquid Swap from my initial $125 investment.
This means, I almost tripled my investment on Binance in these four months. This resulted not only from the recent price surge but also from the interest I have gotten there. To be precisely, I earn daily $0.0793 USD based on the earning yesterday. That seem low but please note that the interest yield fluctuates greatly. There were days where I earned much higher than $0.0793 USD.
Are any risks involved with Liquid Swap
Yes, there is a risk called Impermanent loss which results from the price of the deposited assets. Binance explained it in that way:
"When the price of deposited assets in a liquidity pool changes compared to the time LPs deposited them, impermanent loss happens. The bigger this change is, the more they are exposed to impermanent loss.
This price divergence can give traders or arbitrageurs profitable opportunities. They can execute the arbitrage trade until it brings the token price back in line with the wider market. This results in impermanence loss for liquidity providers."
Is Liquid Swap Worth To Use?
In my opinion, yes. Binance does not only provide interest in your invested currency pairs but also in Binance Coin.
Although other liquidity providers may offer higher interest rates than Binance, you shouldn't forget the high transaction fees happening on Ethereum chain right now.
While the interest rates fluctuates greatly everyday between a low and high interest, the interest in BNB is a incentive enough to put my eggs there.