My Step-by-Step Guide to Earning Passive Income by Providing Liquidity on Decentralized Exchanges (DEXs)
My Step-by-Step Guide to Earning Passive Income by Providing Liquidity on Decentralized Exchanges (DEXs)
Introduction: Why Liquidity Provision is a Powerful Strategy
If you’ve ever traded on a decentralized exchange (DEX), you’ve benefited from liquidity providers (LPs) without even realizing it.
These are the people who deposit their crypto into trading pools, allowing others to swap tokens instantly. In return, LPs earn a share of the trading fees, creating a powerful passive income stream.
But there’s a lot more to liquidity provision than just throwing your money into a pool. The goal is to maximize your rewards while minimizing risks like impermanent loss and bad token selections.
If done right, liquidity provision can be one of the best ways to grow your crypto portfolio.
In this guide, I’ll take you through my personal strategy for choosing the right blockchain, selecting profitable liquidity pools, optimizing earnings with concentrated liquidity, managing risks, and ultimately making money with liquidity provision.