CryptoCrypto Investing

Top 5 LP Tokens: Liquidity Provider Tokens Price and Rewards Explained

5 Mins read

LP tokens constitute a crypto liquidity provider’s share of a pool. Possessing these LP tokens gives complete control over by the time of withdrawing your share of the pool regardless of any interference from anyone. And the absolute control of the token is held by the crypto liquidity provider.

Moreover, LP tokens may function as evidence that you have granted loan the crypto assets to a DeFi liquidity pool. Also, when you order to get back the assets, the tokens will be burned for sure. However, LP tokens can also be invariably utilized to unlock new access layers at a DeFi platform.

In the coming section, we will explore the best five LP tokens to spend money wisely in 2022.    

SushiSwap

SushiSwap/USDT daily chart
SushiSwap/USDT daily chart

SushiSwap is a side stream of Uniswap and provides the AMM (automatic market maker) competent decentralized exchange utilizing an order book. It implies that the swap is less between the assets utilizing liquidity pools, and there is no involvement of a direct seller. The SushiSwap users may obtain liquidity fees by contributing assets to the liquidity pool. It also involves an automated price-fixing arrangement by smart contracts, which diminishes custody risk. Nevertheless, for encountering rapid processing at a lower cost, SushiSwap is effective.

The top-flight supply of SushiSwap is $ 239,609,006.12 SUSHI coins, along with the circulated coin of $127,244,443.00 SUSHI. 

When to buy?

SushiSwap has been trading around $4.00 to $5.00 in price area for an extended period. So, if the price can have an impulsive daily bullish candle close above the $5.00 price area, you can buy SushiSwap with high probabilities. 

What are the perspectives of the SushiSwap project?

The trading volume is in the direct proportion of the Sushi coin price. Hence, an upsurge in the price of the SushiSwap is expected with each upsurge in the volume of trading. It may commence with the $6.37 estimated value in 2022. Furthermore, a stable increment is expected, although it will close with an $8 value in 2022.

Curve Finance

Curve/USDT daily chart
Curve/USDT daily chart 

Curve is an exchange liquidity pool backed by the ETH blockchain network. It was developed to accelerate real-time trading among cryptos of equivalent valuation. Curve avouches to give a high-interest rate for traders providing cryptocurrencies to its liquidity pool. It allows users with lower fees and slippage since the stable coin is non-volatile. Also, it holds seven distinct pools. Four of those pools such as Y, Compound, BUSD, and PAX, are lending pools. A lending pool implies that users may gain money from lending and trading. sBTC and sUSD give trade transactions incentives. Besides, REN and sBTC are token-based liquidity pools.

The maximum supply of Curve is $1,674,854,967.95 CRV coins along with $453,124,018.00 CRV coin in circulation.  

When to buy?

The Curve is currently trading around $3.193 price area and trying to push higher. So, if the price can break over the $3.50 price level with a daily bullish candle close, you can buy Curve with a long-term perspective.     

What are the perspectives of the Curve project?

Compared to other DEXs, Curve provides a loan option with low volatility. Curve users may gain rewards through providing liquidity. Besides, matching a seller for trading on the liquidity pool is unnecessary, which turns into a practical transaction functionality.

Balancer  

Balancer/USDT daily chart 
Balancer/USDT daily chart 

The Balancer platform uses an AMM protocol approved by other liquidity provider platforms. Balancer holds tokens with the valuation of over $11 a million that is supplied into their liquidity pools. All these pools will be utilized to accelerate trades thus providing liquidity to traders resembling in all DEXs.

When to buy?

The Balancer has been trading below the $20.00 price area for two months. So, if the price surge over $20 price area with strong bullish momentum, you can buy Balancer.  

What are the perspectives of the Balancer project? 

Balancer’s objective is to be the top-tier programmable liquidity platform. Balancer V2 eliminates ETH gas fees via vault structure and permits users to trade between Balancer Pools at a fractional cost of trading on different platforms. Customized pool logic may achieve much more other than the index funds as pools. Balancer is something extra than an AMM. It is a structural block for the total DeFi ecosystem.

Kyber Network

Kyber/USDT daily chart
Kyber/USDT daily chart 

Kyber is an  Ethereum based on-chain liquidity protocol that allows Decentralized applications to provide liquidity for an improved user experience. Its domestic coin named KNC is utilized for rewards and ecosystem supervision. Consequently, users stake the token to participate in supervision and gain a return relying on the parameters of the smart contract. Therefore, wallets and vendors allow users to pay, swap, and receive several token categories with a single transaction.

When to buy?

Kyber is currently trading around a $2.00 price area and trying to push upside. However, the price attempted several times to break over the $2.40 price area but was rejected every time. So, it is better to buy Kyber when the price break over the $2.40 price area with an impulsive bullish momentum. 

What are the perspectives of the Kyber project?

The Kyber Network, with its domestic token KNC, is aspiring to be prominent in the future DEXs. Since  Kyber Network is community-based, KNC holders can dominate the number of network fees. Network fees are proportionally distributed as a reward for the providers of the liquidity pool. The crypto community is in the opposition pitch with the centralization of Coinbase and others. Still, the network indicates a genuine potential to obtain market resistance. Although KNC value increased at a trivial level, the coin has depicted relative strength in potential growth in the future.

Uniswap 

Uniswap/USDT daily chart
Uniswap/USDT daily chart 

Uniswap is a DEX that subsidizes a smart contract of equivalent ETH/ERC-20 token pairing, implying that Uniswap instinctively permits users to trade ETH for any other ERC-20 token in a decentralized approach.

When to buy?

Uniswap is currently trading around a $10.68 price area and trying to climb higher. As per the current price action context, if the price can break over the $12.50 price area with a daily bullish candle, you can buy Uniswap by targeting the $45.00 price area again. 

What are the perspectives of the Uniswap project?

Regarding long-term investment, the majority of the analysts agree that Uniswap is excellent. The Silicon Valley venture capitalists support Uniswap; moreover, they’re betting on the future development of the DeFi world. Additionally, Uniswap V3 managed to provide even more alluring features for users in case they choose to become liquidity providers because they may produce higher rewards.

Pros and cons

Worth to buyWorth to getaway
It is accessible for all, which means anyone can access and supply liquidity to a liquidity pool.Temporary loss may take place due to the change in deposited asset ratio.
The control of the digital assets is in the user’s hands. The existing malfunctions and breakdown in smart contracts cause the risk of losing coins.
Some tokens provide fees and captivating outcomes in several layers. Due to being decentralized, there is no supervision over funds. 

Final thoughts

To conclude, the LP tokens replace your share in total funds are locked in the liquidity pool. Then it will be transferred by the decentralized exchange after you deposit liquidity. Afterward, staking those LP tokens will be possible utilizing the supported decentralized lending platforms and generating different outcomes. The method may help you produce two distinct interest rates with a single deposit. 

Trading crypto is an inoperative income opportunity that may help you generate some extra gain from your digital asset. However, it is advisable to keep in mind that there is no such risk-free token to invest in. Therefore, significant to implement research for determining the best-suited investment objectives.

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