Thinking of investing in a liquidity pool?

Before you dive in, consider these key points to maximize your gains and minimize risks. 🧵👇 

🚨 Understand how price volatility between token pairs can affect your returns.
- Example: ADA-Min pair on MinSwap shows high volatility and risk of impermanent loss.

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🚨Larger pools generally mean less slippage but may dilute individual returns.
- Ideal pools have high liquidity, typically valued at a million dollars or more.


🚨Pay attention to the frequency of trade-pairs on the DEx.
- High APRs/APYs on low liquidity pools can be misleading.

Assess the historical price volatility of the tokens in the pool.
- Volatile pairs (e.g., ADA-Min) have high price action changes.
- Stable pairs (e.g., USDT-USDC) have lower returns but less risk.

🚨 Ensure the smart contract has been audited to minimize the risk of hacks.