How I increase my earnings from the Splinterlands SPS airdrop with liquidity pools

After I explained in my previous post why I don't stake my airdropped SPS I got a reply from @axrho introducing me to liquidity pools. Because I had never heard of liquidity pools, I read what I could find about it and I now understand that a liquidity pool makes it possible for us to swap token so cheap on the Hive blockchain, especially if you compare it to the high 'gas fees' on other blockchains like Bitcoin.

It works like this: when you swap from DEC to SPS or visa versa you make use of the large pool of both token that are available in the liquidity pool. Now anyone can investment in a liquidity pool and is rewarded a part of the transfer fees from any swap between one token to the other. For the liquidity pool to work it is necessary that both token are available in equal amount in value. So if you invest in the DEC:SPS pool you have to stake equal amounts in dollar value of both DEC and SPS.

Because you get SPS from the Splinterlands airdrop and this great blog shows there is a strong correlation between DEC and SPS, it makes sense to stake in the DEC:SPS pool. However I chose to invest in the SWAP.HIVE:DEC pool because I am one of the few people who is afraid the value of SPS might drop after the pre-sale period is over.

So I transferred some of my DEC from my Splinterlands account to Hive-engine and swapped half of that to Swap.Hive token. Now I had a set of DEC and a set of Swap.Hive with equal value that I invested in the SWAP.HIVE:DEC liquidity pool on Tribaldex. If you want to know how this is done you can find instructions in the Splinterlands documentation here.

The beauty is that with half the amount of DEC I put in the liquidity pool I still get the same amount of airdrop points as before because every DEC in a liquidity pool counts for two points. On top of that I also get rewarded from the transfer fees of the SWAP.HIVE:DEC liquidity pool.

There is however a catch. I could lose some of my investment through "impermanent loss" when one token changes in value compared to the other token. Luckely that only happens when I take my token out of the liquidity pool, so I keep them in. To reduce the risk I did not stake all of my assets in the liquidity pool.

I have to say that I could find little information on the Tribaldex website, especially how and when I get rewarded. So, let's see how things work out.