Advanced DeFi Guide #1 - DEx Guide

Liquidity Pools and New Launch Tokenomics

This is a guide for people that are familiar with everything discussed in the Beginners guide to Crypto, and for people familiar with the strategies I outlined about Decentralized Exchange Liquidity Pool strategies in section 2 of the Beginners Guide to DeFi.

As noted in the Beginners DeFi guide section written about Decentralized Exchanges (DExes), I warned beginners about the following:

However, I will warn you, that as a beginner, you want to avoid the first 6 months or so of entering a liquidity pool unless you understand some of the more advanced mechanics of IL (impermanent loss) which I will explain in the advanced guide to DeFi in a few weeks.

This guide is specifically to explain the mechanics that occur when a new Liquidity pool is created and how to successfully trade those mechanics, as well as an explanation of the risks that can occur when entering liquidity pools for new tokens.

This guide is part of a series. I will be making Advanced guide posts for every single form of DeFi that can have an advanced guide. Not all forms of DeFi need an advanced guide. These are intended to be documents you can refer back to for probably a year or so until launch structures and token emission schedules likely evolve beyond this. Nothing here is permanent information. If you are reading this in 2023 or 2024, I would take this information with a grain of salt and attempt to correlate with newer information to make sure it is still applicable. As new token emission trends emerge, I will cover them on this substack.

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1. Token Emissions and Inflation

2. High Reward Periods

3. Rapid growth in TVL and Impermanent Loss

4. User Behavior around halving periods

5. Conclusion