Providing Liquidity & Impermanent Loss

Familiar with this?

Impermanent loss is a concern with many cryptocurrency communities. One reason why IL is a major concern is that it might erase any potential profit you ‘thought’ you had, only to realize that is not the case, and you would have been better off just holding.

In Robinos, we’ll like to encourage our $RBN holders to provide liquidity for the trading pair. And we’d be throwing out some of our best deals to incentivize liquidity providers from liquidity mining using those LP tokens. But aside from that, we’d like to give out some tips on providing liquidity to prevent the above situation from happening or making sure the IL suffered can be compensated with the rewards.

We’ll ensure that by staking your LP tokens on our farming pools, the short-term perks will be highly incentivized.

Our farming pools are mostly short-term pools lasting for 7 days, and rewards amplified up to 16x for every 24 hours the LP tokens are staked.

Farming pools will go back to back, so, please remember to unstake and stake again in the new pool to ensure that you get the maximized rewards every week.

We’re not going to automate the restake process because it allows the community to be lazy and sometimes irresponsible for their own assets later on.

By introducing a weekly staking pool, the holders who care about their assets will get a maximized rewards pool, with lesser holders to share the rewards with, if the other holders ‘forgot’ about the pool.

Robinos will be paired with USDC on our partnered Polygon DEX. By pairing $RBN with USDC, it reduces the volatility for liquidity providers as USDC will always remain a constant. It does not eliminate IL, but it reduces the impact of IL a potential user can face.

As $RBN also acts as a profit-sharing mechanism, using USDC as a pairing would allow future holders to easily estimate and even forecast the ROI of $RBN in terms of capital gains, and dividends in the form of profit-sharing from the Robinos operations.

steady, steady, steady

Depending on what each user wants more, be it USDC, or $RBN, timing to provide liquidity is important as well.

This is made easier with a USDC pairing as the value of USDC is constant. Making $RBN the only variable in price movement.

So, simply put:

If you wish to have more $RBN coming out from the IL, provide liquidity when you feel the $RBN price is high, so you will contribute a lesser $RBN for more USDC.

However, if you wish to have more USDC in the long run, provide liquidity when you feel that the $RBN price is tanking. In this case, when the $RBN price recovers, you’ll lose some $RBN, but gain USDC over time.

To learn more about avoiding Impermanent Loss and other relevant strategies, this will be a good read for everyone here!

If you’re interested in knowing more about us, you know where to find us! Drop us some questions as well, I’d love to fill up the Medium spaces on contents that will help the community understand more about Robinos!


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