$KOGE $ZKJ Double Crash, Why Creating a Pool for Altcoins is a High-Risk Activity:

First, let’s introduce AMM (Automated Market Maker). Unlike the order book mechanism in exchanges, AMM relies on user-provided asset pools (commonly referred to as liquidity pools). During trading, the trading pairs in the pool maintain the equation x * y = k, where x and y are the quantities of two currencies, and k is a fixed constant.

Taking $ZKJ - $USDT as an example, when a user buys $ZKJ on-chain, they add $USDT to the pool and take out $ZKJ, while the price of $ZKJ is determined by the ratio of the amounts of $USDT and $ZKJ in the pool.

Creating a pool provides liquidity for the on-chain trading pair of that currency (for example, $ZKJ - $USDT). Whenever someone trades that pair, those who provided liquidity can earn transaction fees. However, this involves impermanent loss.

Impermanent Loss:

Current pools are typically V3 pools. To maximize fee benefits, liquidity providers set a price range. When the price deviates from this range, to maintain x * y = k, the amounts of $ZKJ - $USDT you added will change. When $ZKJ rises, your $USDT will increase, and when $ZKJ falls, your $ZKJ will increase. If it exceeds the range, it will turn into a single currency.

Transaction fees for altcoins are usually 0.25% - 1%. However, for the $ZKJ $KOGE projects, in order to attract Alpha players, they have reduced the fees to below 0.01% and have added a large amount of $ZKJ - $USDT to the pool. If Alpha users add liquidity to earn transaction fees, they will likely set the range to [-0.01%, +0.01%]. This means that if $ZKJ falls by 0.01% or rises by 0.01%, your assets will completely convert to either $ZKJ or $USDT.

When the price rises, it’s fine as you will still have a lot of USDT, and the worst-case scenario is that you miss out on the rise of $ZKJ. However, if the price drops, you will be stuck with a lot of $ZKJ.

If you really want to create a pool to earn transaction fees:

1. Prioritize mainstream coins and stablecoins, such as $SUI - $USDC, $USDC - $USDT.

2. Monitor the liquidity pool in real-time; you can use OKX DEX to check changes in the liquidity pool.

3. Set a conservative range for the strategy.

Liquidity Adding DApps:

EVM Series: Pancake Swap, UniSwap

SOL: Raydium, Orca, Meteora

S: Shadow

SUI: Cetus, Momentum, Aftermath