Have you got 3 Ethereum (or some other amount) ready that you would like to invest in a certain cryptocurrency? Are you worried about buying at a higher price than necessary? Are you sure that it is going to boom so that you want to go all in from the first minute? Or would you like to invest in a more “secure” way that will give you a sort of “security” if the price of the cryptocurrency goes up, or if it goes down? Using a liquidity pool might actually be a good idea!
I have been writing quite a lot about the cryptocurrency StrongBlock recently. It is a project that is really solid and they have a very dedicated team working hard. It is also a big bonus that it is a transparent team, meaning that we know who they are and that they are real people with big names within the cryptoworld. The fact that the price has fallen a lot also means that it has most likely reached the bottom, which means that it seems very likely that the project is only going upwards from here.
So, let us imagine that you would like to use 3 Ethereum and invest them by buying Strong tokens on Uniswap. Let us discuss how this can look!
Investing 3 Ethereum in a cryptoproject
Version 1: Use it all on Strong tokens
You can simply go to Uniswap and spend your 3 Ethereum immediately. However, don’t forget to leave some Etheruem in your wallet, because it is needed to later mine with your Strong tokens which will give you daily rewards and a 400 yearly return (at the moment).
Currently, this will give you approximately 60 Strong tokens. No matter what happens, you will have your 60 tokens, and the value will go up and down, following the Dollar value of the Strong tokens.
Version 2: Buy Strong, but also add to a liquidity pool
You really want to have Strong tokens, but you fear that the price might go further down. A way to “secure” your investment, also in case the price will drop further, you can spend 2 Ethereum on Strong tokens and keep 1 Ethereum. You keep 20 Strong in your wallet, or you mine with them at the StrongBlock website. You then have 20 more Strong tokens and 1 Etheruem. These can be added together to the Ethereum/Strong liquidity pool. Having tokens there will earn you rewards which comes as a percentage of the fees gathered on Uniswap. Besides this, it will also “secure” your investment in part. How come?
If the Strong price will fall further, then the funds you have added to the liquidity pool will be altered. The more the price falls, the more Strong tokens you will own. It can be compared to “buying” tokens constantly as the price drops with your Ethereum token. If the Strong price will increase compared to Ethereum, it will be like continously buying Ethereum with the Strong tokens in the pool.
Of course, this is not the “ideal” purchase, but since we never hit the actual perfect bottom or sell at the perfect top, this is still a way to secure your investment.
What if the Strong price booms? Will I only be stuck with Ethereum tokens?
What a punishment? Haha! That is the cool thing, owning more Ethereum would be cool, wouldn’t it? And if the Strong price falls more, then you are continuously spending your Ethereum at buying more Strong. No matter what, you are winning and can feel quite secure!
Once again, if you would trade perfectly, then that would of course be better, but since it is impossible to hit those perfect trades, this is actually a quite secure way of doing so.
Since you also bought 20 Strong tokens, you will anyway have some Strong tokens for the future, so you are don’t have to worry about loosing it all to the liquidity pool.
Version 3: Add everything to a liquidity pool
This is maybe the safest bet, but if you really believe in Strong, and fear being stuck with “only” Ethereum in the end, then this isn’t so cool. If StrongBlock would moon and be worth 5 times more, you might discover as you cashout from the liquidity pool that there are hardly and Strong tokens left, as they have all turned into Ethereum.
Of course, owning Ethereum isn’t a punishment, but there is still a risk involved here. However, this might be the “safest” way of continously investing in either Strong or Ethereum in the long run.
This is only safe if you love both currencies!
One last word – this is only safe if you are happy with holding both currencies. If I considered buying the token ShitCoin, simply because it has gone up 400% in the most recent days, then I would be very careful. In the end, you might end up owning lots of Shitcoin worth nothing, and since I have no long-term faith in the project, that is a terrible feeling.
But, with StrongBlock and Ethereum, I have faith in both projects and would happy own more tokens on both sides, then it will feel like a win-win feeling no matter which direction my investment might go!
What do you think? Do you agree? I would love to hear your thoughts!