How do I evaluate a liquidity pool using TVL, APR, and trading volume?

Start by looking at the TVL, which shows how much total value is locked in the pool; higher TVL usually means deeper liquidity and lower slippage. Then check the trading volume, since pools with more daily activity generate more fee income for liquidity providers. The APR helps estimate potential yearly returns based on recent performance, but it can change quickly if market conditions shift. A high APR with very low TVL often signals higher risk or unstable liquidity. Consistent volume with solid TVL usually indicates a healthier, more reliable pool. Always compare these metrics together instead of relying on a single number. This gives a clearer picture of the pool’s real earning potential and risk level.

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