Call me /aj | /origami folder | residing in /dcl

Providing liquidity is much different than staking. You are effectively DCA’ing out of $lum as it goes up

Well, I obviously have a lot to learn. What does DCA’ing mean?

what is happening is when the price of LUM goes up the pool swaps your lum into eth, and when the price goes down, swaps eth into lum, within the selected range

you may earn more if the lum is not in the pool when it is rapidly going up, but LP will give you some stable earnings used in the right way,

I am very bad with that, tho 😅

DCA - Dollar Cost Averaging 

According to ChatGPT:

“In a liquidity pool, DCA helps in maintaining a balanced investment approach by periodically adding more liquidity to the pool. This approach is beneficial as it reduces the risk of making a large investment during unfavorable market conditions and ensures steady growth in investment.”

It started out at 50/50. That explains why when I closed my earlier pool when it was no longer in range, I had 0 LUM. I did have more money overall though so that’s cool.

Dollar cost averaging. By providing liquidity you are basically offering your lum/usdc to anyone that wants to buy/sell. The amount of lum/usdc in the pool re-weights as lum reprices. So if $lum goes up you are effectively slowly selling $lum. You can see your pool share is now just 28% lum.