How We Build Hive Stronger

One of the biggest issues happening right now not only in the crypto space but also around the world is a major liquidity issue. It's become one of the biggest factors which has stagnated economies and crypto.

This of course effects Hive as well. When's the last time you tried to get your hands on some liquidly hive or HBD? You most likely found yourself very limited in terms of how much you could get without paying a premium on it. This is what a liquidity issue looks like. Only a few hundred dollars worth can be exchanged otherwise you start paying huge amounts over peg to try and get your hands on more of it.

New DeFi Pools

LeoFinance is helping shape this up by providing a new liquidity farm on CubDeFi in the shape of a BHBD-BHIVE pool. BHBD is a wrapped version of the HBD token on the binance market chain and BHIVE is a wrapped version of HIVE on the binance smart chain. Tie them together and you have yourself a new liquidity pool called BHBD-BHIVE which pays out over 50% APR right now.

What Issues Does Low Liquidity Bring?

Low liquidity happens but if it happens for an extended period of time it can have a damaging impact on adoption of the asset. Low liquidity is when you see drastic swings in both the upwards and downwards trend of the asset. Its why you see those 10%+ sell offs or 10%+ rallies instead of something that is much more fluid.

The spread is also effected. For example you always have people buying and selling a asset. Those buy and sell orders normally have a tight "spread" the numbers between the two. When this happens normal trading happens and the ability to buy or sell the asset happens without any large jumps. However in a low liquidity environment you'll often have a larger spread between the two so when a sale happens to a buy you get 2%+ jumps in price based on a single buy or sell order giving you a increased volatility.

Why Building Liquidity Is Important

Now that we understand the costs of low liquidity it's important to go over why we should work towards increasing it.

By increasing liquidity everyone can now take part in the transactions of that asset. What might have been limited before to small volume trades by a select few is now open to all with little issue of instantly losing out 4%+ when making your initial trade.

This opens up more people to come into the token and as more come in the value of it increases however not at some jump up and down rate as that spread between the two assets numbers would have closed.

This bring in large investors and small investors or ones that simply want to use the swap and chain featured without having to pay a hefty fee. That fee doesn't come in the shape of a fee on the defi network but instead simply on the spread.

Don't forget you can now provide liquidity to hive through CubDeFi in the shape of the new BHBD-BHIVE farm.

Posted Using LeoFinance ^Beta