Liquidity pools via decentralized exchanges remain an excellent way to generate passive income from crypto holdings. Both Unsiwap and Pancakeswap offer tremendous opportunities on this front. Unsurprisingly, stablecoins are the way to go for users with less risky appetites.
Uniswap has a pronounced USDC dominance
There are many ways to analyze the different pools of liquidity across decentralized exchanges. Some will look for the highest APR, although it’s often better to compare volumes and liquidity. Additionally, users who provide liquidity to a pool receive a share of trading fees, making highly liquid pools of great value. While there are no additional rewards to earn – like UNI tokens – these pools remain quite attractive.
It confirms USDC’s growing dominance on Ethereum and is also the most liquid stablecoin on the market Uniswap Platform. Pools for USDC/ETH, USDC/USDT and WBTC/USDC can be found in the top three, with a DAI/USDC pool at number 8. While there are also pairs for UST – like ETH/USDT – it is far less liquid and has a much lower trading volume. This does not mean that users should not provide liquidity as contributing to the pool can bring more than acceptable returns.
Depending on the fees one wants to charge for trading, USDC/ETH offer good options at 0.05% and 0.3%. The first pool has ten times the volume of the second pool, but also generates lower fees per transaction. However, due to its higher volume, it seems to offer higher profitability for the users. Interestingly, both pools are nearly equal at $330.91 million and $340.2 million in TVL.
Additionally, the 0.05% USDC/ETH pool often has 7-8x the 24-hour volume of the 0.3% pool. Even if the fees are 600% lower, a 700-800% increase in volume results in slightly better returns. The launch of Uniswap V3 has certainly made things a lot more interesting for liquidity providers and their approach to these pools.
USDT is more popular on PancakeSwap
Notably, the more popular stablecoin on PancakeSwap is USDT, along with BUSD. USDT can be found in three of the top seven trading pools ranked by liquidity, while USDC features only twice. Additionally, BUSD can be found in three of these pools. BNB Chain’s native stablecoin remains very prominent on this decentralized exchange, which is good to see.
Even more interesting is how the top USDC liquidity pools on PancakeSwap are pegged to other stablecoins. These pairs represent USDC-BUSD and USDC-USDC. One would expect USDC/BNB or USDC/CAKE to be quite popular, but they are nowhere in sight. As such, users can earn an APR of up to 2.02% by using USDC on PancakeSwap in the most liquid pools, or up to 43.38% when trading GMT-USDC.
Remember that users can earn CAKE tokens by providing liquidity to PancakeSwap pools. You can use this CAKE to earn even more rewards and unlock additional passive income over time.
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