Why PowerPool is not financial pyramid?

Product Questions
1

Hello!

I’m new in DEFI, and I have naive, maybe dumb, but important question.
Where did CVP got liquidity to provide such high APY? Tokens in “buskets” have maximum 20% APY, when PIPT for example provides 102%, how? In the first look it looks like financial pyramid.

Thank you.

2

Hi friend, compared to other DeFi platforms (some of them offer 1000%+ APYs), PowerPool offers pretty reasonable returns.

If you take a closer look, the APY you mention (102%) is given to SushiSwap liquidity providers. They need to deposit a basket of PIPT+WETH to SushiSwap to provide liquidity. Liquidity providers create a secondary market for PIPT and make it more efficient. Then they are rewarded for doing it.

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3

Because such high APY is based on liquidity mining program or initial token distribution via liquidity mining. Almost all major Defi projects did this, including Yearn, Uniswap, Balancer, 1inch, Curve, and many more. It is a historically-proven and industry-grade approach for distributing tokens to liquidity providers. Or you want to say that all mentioned projects are financial pyramids?

4

I like this question because a lot more common/new-to-crypto people (who should also be in our target audience) would also ask it. We must be prepared to provide simple yet clear and well structured answers.

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5

Hello!

Thanks all for answers! I almost get it. Last question: where is from in LP such high %? There is 0,3% fee for swap in Sushi. Does such high APY get from quantity of swaps or the thing is in smth else?

Thanks

6

such APYs for LPs are sponsored by projects.
In YETI/ETH, YLA/ETH case, rewards are provided by $SUSHI.
PIPT/ETH by CVP.

That’s a common practice, in general finance companies pay to big Market Makers, like citadel. In crypto, everyone can be a marketmaker.

7

SUSHI pays SUSHI tokens for that. They do it because they want to attract more liquidity on their platform, including CVP liquidity

8

Thanks, I got that it is common practice, but where did those projects get $ for bonuses? Maybe off-top question, but it’s important for me to understand who pays for party.

10

Hello!
Thank you very much, now everything is clear.
How long this APY’s will last on indexes? Where can I see this?

Thanks

11

you are not right. beta/gamma isn’t released yet. supply data on CMC is not correct. Coingecko data is correct. So, 5m tokens were distributed to alpha round and the remaining 5+m with liquidity mining. Circulating supply now is 10,706,674 CVP