Blueshift is a top-rated multichain decentralized exchange (DEX) currently on Cardano and Algorand. This protocol is not just a DEX, it is a capital-efficient Automated Market Maker (AMM) exchange that adopts liquidity portfolio pools instead of liquidity pair pools.
To understand the above, you may need to understand how DEXs and AMM operate. This will educate you more about Blueshift and how it differs outstandingly.
DEXs, AMMs, and Liquidity Pools
There are numerous Decentralized Exchanges (DEX) in the crypto space, which is normal because users need platforms where they can trade their assets and carry out transactions while being in total control of their wallets and funds, which CEXs do not grant them.
Given the safety of DEXs over CEXs, traders feel more at ease trading on DEXs where there are non-custodial frameworks, an absence of intermediaries, and/or KYC.
But are there ways to make trading easier and even bag extra income via DEXs like in the case of CEXs which have bot, futures, and spot trading?
In the early stages of DEXs, one piece was lacking — liquidity, because it was very difficult to have people who would willingly trade any asset regularly. Unlike CEXs where we have spots and futures where traders can trade any asset to make a profit, DEXs lacked this.
Then, Automated Market Markets (AMM) was created. The infusion of AMM into DEXs creates a way by which your crypto assets are tradable in a permissionless and automatic way through the use of liquidity pools other than the traditional way of buying and selling done by you as a trader executing your trade at the price you want directly with a seller
In AMM, there is no need for traditional interaction between a buyer and a seller. Instead, it uses Liquidity Pools where a user has to trade against a pool of tokens. Users supply tokens to the liquidity pools and the price of the tokens in the pools is determined by a mathematical formula.
The use of Liquidity Pools fixed the problem of limited liquidity because users can now provide liquidity by supplying assets to a pool to get incentivized. The incentives liquidity providers earn are mostly fees gotten from users who interacted with the DEX.
Blueshift and its Liquidity Portfolio Pools
The initial liquidity pools are generally made up of 2 assets in a pool, hence they could be referred to as “liquidity pair pools” and users have to provide 1, or in most cases, both of the assets in the pool for liquidity.
But Blueshift thought of a better way to make liquidity even more liquid, using Liquidity Portfolio Pools, instead of the regular liquidity pair pools.
Blueshift Portfolios are similar to Exchange-Traded Funds (ETFs). Each portfolio consists of the crypto assets of different projects and keeps track of the prices of all assets. The performance and value of the entire portfolio establish value in all of the pooling assets and not just a single pair.
Blueshift portfolios reduce the rate of slippages and impermanent loss we find in regular DEXs. In a portfolio:
✓ Virtual pairs can be formed with deep liquidity making swaps easier and more reliable.
✓ Different assets with their AMM algorithms can be placed in different sets to dynamic combinations within the portfolio.
Blueshift’s Portfolio DEX has a smart minting and staking system. With these systems, users can just hold their assets in portfolios and earn rewards for doing so. As far as users remain active and provide liquidity to the portfolio which increases the platform’s overall liquidity, they get incentivized.
Portfolio Liquidity Provision
On Blueshift, you can become a liquidity provider in 2 ways:
✓ Providing liquidity in single tokens, or
✓ Providing liquidity with arbitrary combinations of tokens.
The interesting fact about providing liquidity to Blueshift is that in supplying an asset(s) to a portfolio, you gain a share of all assets in that portfolio and not only the asset you supplied.
You can choose to provide liquidity to different portfolios as there are several to choose from and each of these portfolios has its own weighted set of assets in them.
Adding liquidity to a portfolio grants you rewards in LP tokens and these tokens are a reflection of the value of shares you have in that portfolio. Now, as an LP token holder, you earn rewards from fees paid by traders who performed transactions on Blueshift. You can also earn additional rewards by staking your LP tokens.
How Can You Provide Liquidity To Blueshift Portfolios?
To provide liquidity to Blueshift Portfolios, take the following steps:
1. Go to the Portfolios page of Blueshift: https://app.blueshift.fi/#/portfolios
2. Connect to your MetaMask wallet.
3. Your next step is to select and expand the portfolio of your choice. Click on “Manage” to start up depositing.
4. Click on “Add Liquidity” to proceed.
5. Input the amount of liquidity you want to provide either in USD or BASE currencies.
In the screenshot, 10$ worth of liquidity was inputted to be supplied.
6. Go on to select the tokens you want to deposit.
7. Arrange the token order of deposit by dragging and dropping them. The higher a token is in the list, the more amount of that token you will deposit for the token.
❗The smart algorithm of Blueshift will immediately distribute the total amount of liquidity you want to provide among all your selected tokens within balances to minimize any loss.
These steps are crucial to evade transaction losses:
i. There is a list of tokens arranged: bDAI, BUSD, bUSDT, and bUSDC.
But bDAI is taking all the liquidity while the remaining are 0, so, I’ll drag it down to the last row to distribute liquidity.
Yet, BUSD remains 0 and I want to provide liquidity in BUSD.
ii. I unselect the other tokens by clicking on the blue ticks of each of them, leaving only BUSD to have all liquidity.
But now, I have a transaction loss, of $0.03 and I don’t want that.
iii. Following the tip to add select more tokens, I select bUSDT and bUSDC.
But there’s still a reduced loss of $0.02. I want zero loss but I really do not want to spend my bDAI, so I have to add these selected tokens to my wallet.
iv. To see which tokens and the amount of the tokens to add to my wallet to eliminate any loss, I have to go to the top of the section where you inputted the amount of liquidity and switch off “Provide within balances”.
v. Once that is off, I’ll see what amounts I should add to eliminate losses.
Right now, it says, “Add 20.8 bUSDT”. If you have that amount, you can add it. But I think it is too much, I’d rather pay more for bUSDC.
vi. To achieve the above, I’ll drag bUSDC to the lower part, where bUSDT was, and drop it, so they switch places.
It now states, “Add 16.7425” on bUSDT. I can afford that.
vii. I go back and switch on “Provide within balances” and the transaction loss will be waived off.
N/B: You will evade any form of loss if you follow all the “add” prompts.
8. Now, click on “Add liquidity”, double check the info in the pop-up window and click “Add liquidity” again.
9. Go on to read and confirm the transaction in your wallet.
Congrats! You’ve successfully provided liquidity!
On the expanded portfolio page, LP tokens will increase after the transaction is completed.
Now, enjoy the incentives you earn for providing liquidity. Trust me, it is quite rewarding!
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