Adding Moons to the liquidity pool - a review (almost) 1 month later.

​

Thanks to a post by u/BusinessBreakfast3, I finally plucked up the courage to add some Moons to the liquidity pool (LP) on SushiSwap. Note, these are Moons which I swapped for other coins, not what I've earned on this sub. When adding liquidity, you should only add a maximum of 25% of your earned Moons, or your future pay-outs will be reduced.

My biggest concern when considering adding to the LP, was impermanent loss (IP). For those who aren't aware, the TL;DR of IP is kind of like... when the value of one coin changes disproportionately to the other, you end up losing some of one, but gaining the other. This is in order to maintain a 1:1 ratio of $ value. You can see how this affected me, using the table above.
Due to the fact ETH increased by 0.65% and Moons decreased by 13.80% (from the time I joined) I've 'lost' 0.14002032 ETH, but 'gained' 1,272.7258 Moons. The reason it's 'impermanent' is because I haven't withdrawn from the LP. If you're considering adding to the LP, it's important to keep a record of your entry point, and try to ensure you exit when it's favourable to do so. For example, I'm currently up overall (relatively - more on that below), but a week or so ago, I was down by a similar amount.

Looking at the details above, you'll notice the value of my ETH has reduced by £212.04, but Moons have increased £296.39, relative to what they'd be valued if I hadn't joined the LP. Most of that increase actually comes from the APR you receive from being a contributor to the LP (paid out in Moons, in this case), which has averaged around 48.97% over the 22 days I've been in. Again, these number are relative to what the values would be, if I hadn't joined the LP. What was worth £5,460.92 on the 8th April, is now actually worth £270.15 less, but it would be £355.95 less, had I not joined the LP.
Similar to IP, this is only something to be concerned about if/when exiting your position.

In conclusion, then - I wouldn't necessarily suggest anyone should buy Moons... that's a decision you should make for yourself. As you can see, if I'd held the equivalent Moon value in ETH, I'd have been better off. But, the point of this post is to hopefully encourage others to add some of their Moons to the LP. If you're planning to hold, adding to the LP may help boost the ecosystem, plus you can gain some sweet, sweet extra Moons along the way!