Providing liquidity to decentralized exchanges with VIP wallet advantages
Liquidity provision is one of the most accessible ways for VIP wallet holders to earn passive income in DeFi. By providing liquidity to decentralized exchanges, you earn trading fees and often additional token rewards, while your premium address may provide access to exclusive pools and better terms.
Types of Liquidity Pairs
Stable Pairs
Low Risk2-8% APY
Pairs of stablecoins or correlated assets
Common Examples:
USDC/USDTDAI/USDCETH/stETH
Advantages:
Low impermanent loss
Predictable returns
High liquidity
Considerations:
Lower yields
Limited upside potential
Blue Chip Pairs
Medium Risk5-20% APY
Major cryptocurrency pairs
Common Examples:
ETH/BTCETH/USDCBTC/USDT
Advantages:
Moderate IL risk
Good liquidity
Established markets
Considerations:
Some impermanent loss
Price volatility
Exotic Pairs
High Risk20-200%+ APY
New or volatile token pairs
Common Examples:
New tokens/ETHGovernance tokensMeme coins
Advantages:
Very high yields
Early opportunity
High rewards
Considerations:
High IL risk
Token risk
Low liquidity
Understanding Impermanent Loss
Impermanent Loss Scenarios
Impermanent loss occurs when the price ratio of tokens in a liquidity pool changes. The loss is "impermanent" because it only becomes permanent when you withdraw your liquidity.