Part 3/8:
Central to this investment strategy is the "flywheel" mechanism, which promotes self-sustaining growth. For instance, when liquidity pools generate a 100% Annual Percentage Rate (APR), portions of that income can be either reinvested (compounded) or withdrawn for living expenses. By strategically balancing between income generation and reinvesting, the investor illustrates the potential of progressively increasing returns.
In a hypothetical example, this flywheel effect could escalate passive income from $416 per month to nearly $1,000 in a year, showcasing how incremental gains can lead to substantial financial growth in the long term.