This is a great reminder that DeFi rewards are never free money. Every percentage point of yield comes with a corresponding risk, and knowing the mechanics is the only way to honestly weigh that trade-off

𝗗𝗢𝗡𝗧 𝗟𝗘𝗧 𝗧𝗛𝗘 % 𝗙𝗢𝗢𝗟 𝗬𝗢𝗨!
—————————————————————

When people provide liquidity, they usually focus on rewards first like APY, incentives and farming boosts, but before rewards there is something more important to understand which is how the pool behaves.

On STONFI, a liquidity pool (LP) makes the prices be based on the supply and demand, and every trade slightly changes the balance inside the liquidity pool also known as LP.

Thus, when the trading volume increases, fees increase.

Also when there are many active traders of the particular tokens, the price impact can reduce because of the more people trading it.

Same goes for the token volatility which simply means the rate of change in market price, and if it rises, the price change inside the pool will become more noticeable.

—————————————————————

So before entering any pool, it is always best to understand the type of pair involved (eg Ton/USDT $TON ) because a stable pair (like $USDE ) behaves differently from a volatile pair (like $ZAMA )

—————————————————————

In a brief of all, when you want to provide liquidity, do not be carried away by the yield percentages like APY or APR.

It is always better to understand the mechanics of the LP you wish to enter, and this can help reduce the risk you take whenever you are dealing with liquidity pools.

#LiquidityPools #YIELD #Farming #STONFI