Why Become a Liquidity Provider on Biatec DEX?
I recently received a very direct question from a community member: "I became a liquidity provider just now, and in 1 day I lost 5% of my capital. So what is so good about it?"
It is a fair question, and it highlights the most common misunderstanding about Decentralized Finance (DeFi). Liquidity Provisioning (LPing)—especially in a Concentrated Liquidity AMM (CLAMM) like Biatec—is not a savings account. It is an active investment strategy that functions like an automated trading bot.
If you treat it like a passive "hodl" strategy without understanding the mechanics, you can indeed lose value relative to just holding the tokens. But if you understand the use cases, it becomes one of the most powerful tools in DeFi.
Here is why sophisticated investors choose to provide liquidity on Biatec, and when you should avoid it.