Airdrops create initial excitement but the value of tokens depends on the project's fundamentals. Strong projects with real utility tend to hold value, while speculative ones may drop after the initial hype. It's important to assess a project’s long-term viability before investing.
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Liquidity pools are pools of cryptocurrency locked in smart contracts on decentralized finance (DeFi) platforms, enabling decentralized trading, lending, and borrowing. In exchange for providing liquidity, users receive LP (liquidity provider) tokens, which represent their share of the pool. These pools are used by automated market makers (AMMs) to facilitate trades between different tokens without relying on traditional order books. Liquidity providers earn fees from the trades that occur within the pool, which serves as an incentive for users to contribute their assets. However, liquidity providers are also exposed to risks like impermanent loss, where price fluctuations of pooled assets can lead to lower overall value compared to simply holding the assets outside the pool.
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The RSI is a momentum indicator that helps identify overbought or oversold conditions in the market. It ranges from 0 to 100, with readings above 70 indicating overbought conditions (potential for a price pullback) and readings below 30 suggesting oversold conditions (potential for a price rebound). In the volatile cryptocurrency market, RSI helps traders spot extreme market conditions. A sudden rise or drop in RSI can signal a potential trend reversal, making it a useful tool for timing entries and exits during periods of overextension.
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