#alpha has no impact on newcomers because once you add 1000U to the LP, you won't have much money left to trade volume, and it's easy for newcomers to lose money by adding LP. It's better to first learn about 'impermanent loss in LP' before deciding whether to add LP.

Is adding LP really profitable? Is the annualized return really that high?

In terms of transaction fees, it can be profitable, but the annualized return may not be as high as advertised. High annualized returns will only occur within a narrow price range; as soon as the price fluctuates out of that range, the LP becomes ineffective. You need to return to that range or withdraw and add a new range for it to remain effective. Adding and removing LP also incurs slippage, leading to hard losses. Therefore, LP is generally played by friends who are familiar with DeFi; newcomers are at high risk of losing money.

What are the risks?

For example, if you add a pool of 1000 USD in ZKJ and 1000 USD in USDT, here are two extreme scenarios:

🔸 ZKJ suddenly crashes, and your 1000 USD in USDT turns entirely into ZKJ. Then, if ZKJ continues to plummet, you find yourself left with ZKJ worth just over 1000 USD, feeling despondent.

🔸 Alternatively, if ZKJ skyrockets, all of your ZKJ converts to USDT. If ZKJ keeps surging, you can only watch your over 2000 USD in USDT, feeling regret, wishing you had held onto that 1000 USD in ZKJ for greater profits.

This new regulation is just to address the needs of some people who want to add LP but are afraid of not having enough balance left for distribution. It can mobilize some wealthy individuals to put a large sum into the LP pool without affecting the scoring.

It only considers your total amount and does not score separately.