Impermanent Loss

What is Impermanent Loss?

Impermanent loss occurs when you provide liquidity to a pool and the price of your deposited assets changes compared to when you first added them. The greater the price fluctuation, the larger the potential impermanent loss.

This happens because AMMs rebalance asset ratios to maintain pool equilibrium, which can lead to lower returns than simply holding the assets outside the pool, especially in volatile markets.

👉 Click here to learn more: Impermanent Loss Explained

Still confused? Don’t worry. The linked article breaks it down with simple examples to help you understand how IL works and how it may affect your returns.

Stay tuned for more updates and educational content on liquidity and DeFi mechanics.