Recently, everyone has been talking about testnet incentives, earning points, and guessing whether the mainnet will issue tokens... I just want to pour a little cold water: even if they do issue tokens, it doesn't mean that just putting your funds into the pool for market making is guaranteed to be a free lunch.

The curve of the AMM is basically just automatically helping you "sell high and buy low." Once the price moves, your position structure is forced to change accordingly. In the end, it may look like you have more or fewer coins, but compared to just holding, the difference is the impermanent loss. When the market moves sideways, it's okay, but if it trends strongly in one direction, the trading fees might not cover the losses, especially if you think you're "earning from trading volume," when in fact you're just paying tuition for volatility.

I'm currently quite conservative: I prefer to slowly accumulate positions, only use a small amount for market making as an experiment, and not treat earning points as a get-out-of-jail-free card. What about you?