Uniswap for Dollar-Cost Averaging

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02/09/2025
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02/09/2025

Uniswap for Dollar-Cost Averaging

Providing liquidity can act as a form of automated dollar-cost averaging. As asset prices fluctuate, the pool mechanism automatically buys more of the cheaper asset and sells the more expensive one. This enforces a disciplined investment strategy, systematically acquiring more of an asset when its price is low. Over time, this can lead to a favorable average purchase price. This is a unique benefit of the Uniswap how swap coins model compared to simple buying and holding strategies.

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