Stablecoin Hives

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What is a Stablecoin Hive?

A Stablecoin Hive refers to a liquidity pool of 2 stablecoins (e.g. USDT and BUSD) on a decentralized exchange (e.g. Pancakeswap).

The exchange fees, that someone has to pay if they want to exchange these two coins for each other, are paid directly to the liquidity miners.

The exchange fees are divided among the individual Liquidity Miners according to the share someone has in this total pool. Example: Someone who invests 10,000 USD in a Stablecoin Hive gets 10 x more exchange fees than someone who is only invested with 1,000 USD.

Since both currencies in the Hive are pegged to the same $-value, Stablecoin Hives are free of Impermanent Loss and considered to be very low risk.

The Stablecoin Hives throw off different returns (rewards). The Rewards are dependant on the following factors:

  • On the Total Value Locked in a Hive. (The more liquidity provided, the lower the returns because the trading fees have to be splitted amongst more users/capital)

  • On the Trading Volume: The more traiding volume between the two currencies of a Hive, the higher the returns. More trades generate more fees..)

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