To make money from STON.fi liquidity pools, you need to understand all the factors that affect a pool’s APR. With this knowledge, you can decide whether providing liquidity is worth it.
Volume📊
Trading volume in a pair is key to APR. But be careful: volume might spike for a day due to news and then drop. Always check the average APR over the past month for a more stable picture. If your goal is to farm while APR is temporarily high, shorting the token might help hedge risk if you care only about APR and not token price.
Fee💸
Swap fees in pools range from 0.04% to 1% and are shown in each pool. The higher the fee, the more you earn from each swap, meaning higher APR. This is a key factor for steady high APR.
Liquidity 💧
Some pools have very little liquidity, which can boost APR, while others are overhyped with too much liquidity, resulting in low APR not worth the risk.
Reinvesting💰
You can turn APR into APY by reinvesting your liquidity monthly. Withdraw and redeposit it to compound your earnings. Use an APR to APY calculator. STON.fi doesn’t charge fees for adding or removing liquidity. You only pay TON network fees, around 2 TON/year under normal conditions.
Impermanent loss 📉
Always consider potential impermanent loss. When I provide liquidity, I try to estimate the direction of token prices and subtract expected loss from APR to get a net APR including risks.
Use the STON.fi impermanent loss calculator. Search on Google: "STON.fi impermanent-loss-calculator".
Example🔍
I like the PX/USDT pool with a 75% average monthly APR and a 0.7% swap fee. Liquidity is lower ($42k) than PX/TON ($840k), which boosts APR. If I reinvest monthly, 75% APR becomes 97.38% APY.
Since USDT is stable, I only consider PX volatility. I believe PX will 2.5x from $0.084 this year. I enter this into the impermanent loss calculator.
Then, I subtract 8.72% potential loss from 97.38%, giving me 88.66% net APY with risks included.
Keep in mind APR fluctuates and even a monthly average isn’t perfect. But here, APR more than covers the risks, so I believe it’s worth providing liquidity.
Note: I didn’t include $TON network fees in the reinvesting estimate.
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