Quote:
Originally Posted by afc wimbledon
That doesn't make sense, you have to sell the crypto in the same way you have to sell a stock in order to cash out, that is never instant, the exchange might take on the risk and so it would seem instant to a seller but the exchange is still offering up bitcoin for sale in a bear market where the price is dropping like a stone, they have enough crypto to move they might not be able to find a buyer
|
They wouldn't be selling the crypto on an exchange though. Liquidity pools handle transactions automatically and virtually instantly. Part of putting your crypto into the pool is that in return for the yield you get from transaction fees, you agree that your coins will get bought and sold at whatever price the Automatic Market Maker determines (which is based on ensuring the pool remains balanced between the different currencies). So you don't need a willing buyer and seller at any given moment, that's all handled automatically. And as long as there's enough funds in the pool, the transactions can happen basically instantly.
I'm not saying it's a good idea or necessarily stable. If crypto prices decline fast enough that people want to pull money out, then yields have to become higher for it to function (which means higher transaction fees). And it's probably not really possible to scale to widespread use using that method of handling transactions.