MOON Liquidity Analysis: Good for the Ecosystem, Not Increasing Value

There has been a bunch of buzz about adding MOON liquidity with the recent proposal to add MOON rewards for adding liquidity. I think it is safe to say that we all want more MOON and judging by the comments on this proposal it has increased interest in adding liquidity for MOON. One thing that gets mentioned that not everyone understands is impermanent loss.

Adding MOON Liquidity

I have added liquidity twice to MOON. This was done at the very beginning when MOON just went to Arbitrum Nova.

~125 MOON and 0.005 ETH and ~90 MOON and 0.005 ETH

You can see the ratio of MOON/ETH is different since the value of MOON and ETH changed in the 2 days between adding liquidity.

Total Added: 210 MOON and 0.010 ETH

Today LP Value: 161 MOON and 0.0168 ETH (this includes ~6 months of fees)

Today I have $11.40 more ETH and $7.87 less MOON. I sold MOON to get the ETH to add liquidity. If I kept all 420 MOON and did not add liquidity, my crypto would be worth ~$74 instead of ~$58, a net 20%+ loss.

I added liquidity knowing that it would likely be a losing proposition but knowing that MOON needs to have liquidity to have value. I view that early LP adders were adding liquidity not to make money, but to better the ecosystem.

If you expect MOON to increase at a rate faster than ETH, you likely will have more crypto if you did not add liquidity. This does not mean that you shouldn't add liquidity, a concentrated liquidity pool is crucial for MOON long-term, but you should be aware that it likely will not be a net money maker.