I am very familiar with this. I set up a 3500U LP at 4 PM today, and after about 5 hours, I've earned roughly 10U.
In an ideal state, a profit of 2U per hour could yield an annual profit of 17280U.
Of course, it is generally not this ideal.
🥴 The new rule actually includes the LP positions in the balance statistics.
For example: having a balance of 5000 $USDT can earn 2 points, but if you invest all 5000 USDT into liquidity, you still only get 2 points, no additional points.
If it was before the new regulations, investing in LP would mean no balance, and hence no balance points, because balance points do not account for the position part.
👾 The risk of forming LP is extremely high.
Assuming the price of the A token you invested in drops, your USDT will all be converted into A tokens during this process, taking a big hit, especially since there is no options insurance for the Alpha tokens above.
👊 How to hedge risk
The simplest method is protective puts (simulated Put Options).
Operation: Hold Alpha tokens spot + buy equivalent perpetual contract put short position.
Principle: When the token price drops, profits from the short contract offset spot losses.
When the price rises, only the contract margin is lost (similar to option premiums). Those who love to experiment can try it out.
Not suitable for risk-averse friends.