The Bitshares DEX supports liquidity pools!
Did you know that the Bitshares blockchain has supported liquidity pools (automated market making) since version 5.0?
These liquidity pools enable you to stake your assets and share in the market fees accumulated through the making of markets configured in your chosen liquidity pool.
Want to read more into the technical side of Bitshares liquidity pools? Check out the Liquidity Pool documentation!
Considering multiple centralized lending pool platforms have been going bust left right and center, the time to look into decentralized liquidity pools on the Bitshares blockchain has never been more appropriate!
Where to find liquidity pools
You can find liquidity pools on the Blocksights Bitshares blockchain explorer! This page is helpful to find the largest and potentially the most lucrative liquidity pools to participate in.
You can search for liquidity pools within the Bitshares web wallet!
As you can see in the above screenshot, there are multiple liquidity pools which use XBTSX.USDT; I like the look of the XBTSX.USDT:XBTSX.USDC & XBTSX.USDT:XBTSX.BUSD liquidity pools as they're just providing liquidity between different types of dollar tokens in exchange for the taker fee listed alongside the liquidity pools which feels less risky than providing liquidity between two volatile assets, however your personal risk tolerance may be higher than mine.
The only thing about searching for liquidity pools within the web-wallet is that you need to know what assets need liquidity to proceed, that's why utilizing the Blocksights pool explorer can benefit your search for liquidity pools on the Bitshares DEX.
Who can make one of these liquidity pools?
All Bitshares users are able to create liquidity pools on the Bitshares blockchain.
So, if there's a trading pair which you want to provide liquidity for whilst earning taker fees for making said market, you can create the liquidity pool to enable this automated market making on your behalf for your configured trading pair.
Some community members have created several liquidity pools which all compliment one another, growing liquidity and providing additional value to liquidity participants through the distribution of collected fees.
Check out these liquidity pool tools:
Why are liquidity pools beneficial?
They improve liquidity in a specific market trading pair, meaning it's easier to buy and sell closer to the real market rate the trading pair is going for.
As a liquidity pool liquidity provider you benefit from being able to earn more tokens from your existing tokens, without leaving the decentralized exchange on the Bitshares blockchain.
Too often lately centralized liquidity pool platforms turn out to be significantly over leveraged or bankrupt; you can avoid this scenario by choosing decentralization over multiple additional layers of middlemen between yourself and yield on your token of choice.
How do liquidity pools compare to credit offers?
Liquidity pools are entirely automated, so as soon as you join it, you no longer have to do anything.
Credit offers on the other hand, as a lender, you'll need to top up your credit offers if the available borrowable assets are depleted & you will need to adjust the accepted amount of backing collateral somewhat similarly to publishing smartcoin price feeds occasionally.
There's certainly room for both to exist on the Bitshares blockchain, and both have their unique use cases which you can take advantage of to earn crypto with existing crypto in a decentralized manner.
Credit offers you can control the minimum borrowable amounts, and you can apply greater fees than liquidity pools charge for market making.
So, are you interested in decentralized liquidity pools?
Are you already using them for your preferred Bitshares DEX market trading pairs?
Comment below with your experiences!
Also see:
https://app.xbts.io/#/pools
https://github.com/bitshares/bitshares-core/releases/tag/5.0.0 (relevant release notes for inclusion of liquidity pools)