For cryptocurrency holders, one of the ways to earn passive income on your idle cryptocurrency is to supply them into liquidity pools and earn yields from these liquidity pools.
Here’s a simple illustration from Uniswap on how liquidity pool works:
As a liquidity pool provider, you will earn interest originating from the transaction fee generated whenever a trader or borrower executes a cryptocurrency trade.
For Harmony One, here are a list of liquidity pool provider or yield farms where you can supply your cryptocurrency into in order to generate a return on your digital asset.
|Pool Provider||Reward Tokens||Website|
As there are new yield farms being created everyday, please do your own research on the team’s background before committing large amount of cryptocurrency to a new farm.
As a rule of thumb, signs of a good liquidity pool include:
- The longer the liquidity pool is around, the safer it is.
- The more total value locked in the farm, the safer it is.
- The more cryptocurrency pair available for staking, the safer it is.
- High APYs (4 – 7 digit APYs) generally means the liquidity pool is relative new and less stakers to split the pool rewards.
- The more users staking their cryptocurrency (total value locked), the safer it is.
- The more protocols built on top of the liquidity pool, the safer it is.
Here’s a look at Mochi, one of the more popular liquidity pool provider for the Harmony One Network: