WTF is Impermanent Loss in DeFi and How To Avoid It?by@ioanafrincu
572 reads

WTF is Impermanent Loss in DeFi and How To Avoid It?

tldt arrow
Read on Terminal Reader
Read this story w/o Javascript

Too Long; Didn't Read

One of the risks associated with DeFi, or decentralized finance, is impermanent loss. This is a temporary loss of funds that can occur when providing liquidity to a liquidity pool. Automated market makers, such as Uniswap, use liquidity pools for exchanging one asset for another. When the initial price of the tokens that the liquidity provider provided to the pool deviates from the current global price of those tokens, an arbitrage opportunity arises, resulting in lost capital for the LP.

Company Mentioned

Mention Thumbnail

Coins Mentioned

Mention Thumbnail
Mention Thumbnail
featured image - WTF is Impermanent Loss in DeFi and How To Avoid It?
Ioana HackerNoon profile picture

@ioanafrincu

Ioana

Receive Stories from @ioanafrincu

react to story with heart

RELATED STORIES

L O A D I N G
. . . comments & more!