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EARN PASSIVE INCOME WITH DEFI VIA MARKET MAKING
EARN PASSIVE INCOME WITH DEFI VIA MARKET MAKING
WHAT IS THE OVERALL GOAL?
WHAT IS THE STRATEGY?
WHAT DO I PROVIDE?
HOW DO I GET STARTED?
WHAT ARE THE RISKS?
WHAT ARE THE OPEN QUESTIONS?
WHY DON'T I JUST HOLD ETH?
SUMMARY
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How do liquidity Pools Work?


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Why do we need liquidity pools?

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Why can’t we just reproduce traditional system in DefI?

We can but currently too expensive, market makers can become illiquid.
Current ETH blockchain is slow
Scaling solutions adds additional steps
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How does liquidity pools work?

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Liquidity Pool - Formula

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Goal - Ratio between tokens remain close to 1

Liquidity Pool - Ratio dictates price

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Larger Liquidity pools have less slippage because they are able to handle bigger trades

Concept - AMM

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Take the tradition order book market making and automate it (AMM)
provides incentives for people to participate via rewards

Potential Risks

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Bugs in the Blockchain
Admin Keys
Systemic Risk
LP hack
Impermanent Loss


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