First of all, welcome to Incognito,
and thank you for deciding to add liquidity.
For now I can only tell you what I know about the process of providing liquidity on the Incognito platform. Hopefully this will give you more insight about how you want to utilize your money.
Incognito currently has two methods of providing liquidity:
-The add feature allows you to provide liquidity to the network by adding pairs. When you provide liquidity this way, you have to match the crypto you want to insert with Incognito’s own currency PRV. Users who provide liquidity this way earn rewards from transaction fee’s based on the percentage that they inputted. However, providing this way leaves you susceptible to impermanent losses because of Incognito’s Automated Market Making algorithm.
Because people were being hit hard with impermanent losses, and returns where lowering, Incognito came out with Provide to help mitigate the risk.
-The provide Tab is a layer built on top of the “Add” functionality. However, it comes with certain benefits that aren’t available to normal liquidity providers.
Users are guaranteed to be able to pull out the same amount of crypto that they put in (meaning no Impermanant Losses). Users are also allowed to provide only one side of the pair, making it more reasonable for the average user. However since the “Provide” layer is built on top of the “Add” layer, impermanent losses are still a factor. Incognito get’s around this problem by making the return rates variable as well as supplementing some of the losses with the Incognito Reserves. From what I understand, “Provide” was only meant to be a temporary feature while we looked for a more sustainable solution. In fact I would encourage you to read this: Liquidity v.2
Provide matches inserted PRV with other inserted crypto, across users, to add pairs to the liquidity. I believe this could possibly take some time to do.