Explaining Trade.io and its liquidity pool

Introduction

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In the first article about Trade.io, I explained how this project empowered their community of users, by letting them participate in the decision process regarding which features and tokens are added to the exchange.

However, the goal of allowing the users to have more control compared to what’s common in other platforms, is present beyond that. In most entities that make business by lending and investment, there are usually fees that clients has to pay and those fees represent the earnings of said entity. But since Trade.io is looking to differentiate itself from any competition, they bring new ways of doing this type of activities, and here is where the liquidity pool comes into action.

What is Trade.io Liquidity Pool?

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The liquidity pool is basically an option for users to participate in a lending activity, so Trade.io can leverage those resources and hopefully achieve higher returns, for anyone who wants to participate the minimum investment is 2,500 TIO which is the token used in the Trade.io platform, right now, according to coinmarketcap each Trade.io token is worth $0.20437, and once that minimum requirement is met, participants can add as much as they want in their preferable form, this means other crypto currencies and even fiat money. It is also important to notice that every person can enter and leave the pool at any moment without no complications whatsoever, so it is not like people will be tied into the pool for several days.

Similar to what was explained in the previous article regarding the different categories of investors based on the amount of money they decided to invest, in this case there are different tiers that will be taken into account when calculating their return. We can see some basic numbers as an example in the following picture:

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Nevertheless, in every investment there are always risks, and for this reason Trade.io will be providing what they call the “seed capital” of about $50 million. Source as well as reserve of 50 million TOIs, this will work as a layer of protection to the people who decide to invest their money using this method.

The fact that Trade.io is putting so much of their own resources to start this initiative and to protect the users, shows that they are very confident in their ability to obtain positive returns, after all, they are also offering ICO consulting services to guide new projects and help them find success, so every knowledge and experience related to the criteria needed to identify good projects is well covered.

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The benefits for the users will come from 50% of the revenue earned by Trade.io when leveraging the resources available in the liquidity pool, these benefits are distributed on a daily basis using the crypto currencies that Trade.io has available on that particular day. This is the way Trade.io plans to empower and bring new benefits for its users, because in most cases, this revenue isn’t distributed back to the people, but that is not the philosophy behind this project. Distributing part of the revenue allows each individual to receive benefits as a result of the platform’s success, creating a community of individuals with the common interest of seeing Trade.io succeed.

However, the distribution of benefits will only be done after the “high water mark has been reached”. | Source This means, that a certain profit level needs to be reached before any distribution of interest, I took the time to ask in the chat what was that profit level and it hasn’t been specified as of yet, and since the liquidity pool hasn’t been launched as of yet, this should be one of the aspects they are still working on, and will surely be cleared up eventually.

Risks of participating in the Liquidity Pool

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As any cryptocurrency investment, there is always the risk of some project completely failing making their token literally worthless, which will obviously hurt the return from the liquidity pool, however, savvy investors always find the way to at least partially avoid bad investments and end up with a positive return, given the experience of the Trade.io team, it is expected from them to be knowledgeable regarding any project in which they invest, and let’s not forget that one of the features for investors using this platform, is that there will be extensive review of any project enlisted in the exchange, evaluating their whitepaper, doing background checks in members of each ICO, and other measures that can certainly be an effective filter allowing to differentiate good projects that are worthy of an investment, from bad project that are better to ignore.

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There is also the remote possibility of Trade.io ending up in insolvency, which would clearly mean a total lost for every participant of the Liquidity Pool, this is something very unlikely, but possible nonetheless so it is worthy of mention.

Conclusion

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The Liquidity Pool is indeed an interesting new way to invest in the blockchain industry, by pooling resources together and allow a team of experts to decide the best strategy, it gives the user a lot of control because they can leave the pool at any moment, so in case things go bad, it is not like they will be forced to stay. There are of course some risks, but it is completely normal, especially in an industry such as this one. What Liquidity Pool certainly offers is a way to increase the diversification any wise investment strategy should always have, and because of this reason, there will surely be a lot of users deciding to participate in this initiative as soon as it is launched.