But did you know there's a way to multiply your wealth without trading, speculating, or buying 75 different altcoins hoping that at least a few of them will moon? Today, we will be speaking about one of our latest financial crypto products – Liquid Swap.
It's only a few months since we announced Liquid Swap, but we’ve added many more cryptocurrencies since then, and with it grew the number of users and trading volume. Liquid Swap quickly became one of the most popular financial products within the Binance Ecosystem and the crypto market. As of October 3, 2020, the active stablecoin volume on Liquid Swap reached $128 million, and in total, there’s over $22 billion locked in DeFi.
What is Liquid Swap?
Liquid Swap is a product for both traders and users who have asset management needs. You can use the simple swap function to buy and sell your desired token with your tokens or local currency. You can also add your assets into the pool (contributing liquidity) and earn returns (get trading fee return generated from the swap functions.œ
Watch a crash course video on “ What is Liquid Swap” at Binance Academy to learn more.
Automated Market Makers serve two purposes:
1. Traders will benefit from a seamless trading experience with instant trades and less slippage.
2. Liquidity providers earn trading fees and flexible interest.
Liquid Swap is based on the same mechanics as any other liquidity pool or yield farming platform. It consists of different liquidity pools where each pool contains two digital tokens. As it's already a tradition for Binance, it comes with lower fees, a wide range of different pool assets, and higher earnings than other popular liquidity pools. Binance is also the only liquidity pool platform that provides fiat currencies such as EUR, AUD, or KRW.
How do I earn money with Liquid Swap?
If you want to earn passive income with Liquid Swap, you can become a liquidity provider. You will be adding your own assets to the pool and, well, providing liquidity to traders. You will earn transaction fees and flexible interest (also called yield) based on the selected pool's specifics and added assets. Currently, Liquid Swap offers 12 different pools that include favorite assets such as BTC, ETH, BUSD, USDT, EUR, or DAI. Each of these pools offers a different yield, and you should wisely consider all the pros and cons before selecting a specific pool or even using Liquid Swap in the first place.
You can choose from two types of Liquid Swap pools:
1. Stable - This type offers a hybrid constant function AMM system that realizes the transaction and pricing between two stablecoins (BUSD, USDT, BKRW, DAI, etc.) and comes with low slippage. Due to the nature of stablecoins, this model offers lower exchange rate/price fluctuations thus providing a more reliable and stable market-maker income, but at the expense of lower earnings potential.
2. Innovative - The innovative pools are developed with a constant mean value AMM system that realizes the transaction and pricing for two digital tokens or two fiat currencies, or a combination of both (i.e., BUSD/EUR). This model comes with a higher exchange rate/price fluctuations, resulting in an increased risk of volatility but with the benefit of higher earnings potential.
Liquid Swap allows you to add both assets to the pool and benefit from 0 fees, or you can add only one of the assets, but you’ll have to pay a fee. The fee varies based on the pool and the asset you want to provide liquidity to.
For example, you can add at least 10 BUSD to the Stable pool - BUSD/USDT to start your journey to be a liquidity provider and earn passive earnings. After adding to the pool, the system will automatically convert part of 10BUSD into two tokens, which means the pool share composition should be BUSD+USDT. And you can check the share of value and the total yield on the “My Share” page through the Binance APP or Binance.com.
How do I earn passive income with Liquid Swap?
Once you select a specific pool where you want to become a liquidity provider and add the required asset(s), you’ll immediately start earning passive income. Your earnings are based on multiple factors, such as the current pool size, APY, and pool activity. Generally speaking, you want to choose a pool with a low pool size but high APY and pool activity (number of transactions/trades). Binance Liquid Swap allows you to redeem your earnings at any time.
There are three sources of income for liquidity providers:
1. Fees income where you earn a share of transaction fee from all the pool transactions.
2. Flexible interest based on the amount of added assets and specific pool. This is applicable only if there’s a corresponding flexible savings product.
3. Regular promotions where you can win additional rewards on top of your earnings or increased yield. Our last Liquid Swap activity came with a prize pool of 500,000 BUSD!
Can you turn $100 into $1000 in a trade? If you want to learn how to calculate your yield and earnings potential, visit Liquid Swap FAQ.
How do I use Liquid Swap as a Trader?
Traders can use Liquid Swap to swap between different assets available in the supported pools and enjoy lower fees and instant swap (exchange between two assets) compared to the regular Binance.com trading function. Arbitrageurs become the main force in helping the AMM keep the price close to all the other markets.
Advantages for traders:
1. Room for arbitrage due to price difference
2. Only 0.04% fees, which are lower than other popular AMM platforms
3. Convenient instant swap
Risk warning
It’s important to note that Liquid Swap, just like any liquidity pool, isn’t a risk-free investment.
Before you start using Liquid Swap, you should DYOR and read the educational content on Binance Academy or alternative third-party sources. You can explore the risks on the Liquid Swap FAQ.
Multiple factors pose a risk, such as:
1. Exchange rate/price fluctuations in digital assets and fiat currencies may affect the value of your share.
2. Large adds or redeems of a single token can negatively affect the value of your share or in total loss of funds due to excessive slippage.
3. Frequent adds or redeems of your assets can pile up the fees, so try to avoid moving your funds too often.
The future of Liquid Swap
As Liquid Swap becomes more of a household earning product among crypto enthusiasts, we’re working hard on adding more DeFi liquidity pools for yield farming to provide you with an even wider choice of pools with high earnings.
We’re always improving the user experience using Binance products and plan to add more interesting projects to Liquid Swap, such as BNB yield farming and others.
Try out Binance Liquid Swap now!
