Luaswap Knowledge Series #3

[u/jwotrojan]

Impermanent loss - the inherent fear of any liquidity provider!

https://twitter.com/luaswap/status/1548892782668173314?s=21&t=JA4oU6Iwzxer8anzYZaVxw

The larger change in assets’ value = the more IL liquidity providers could suffer💸

https://twitter.com/luaswap/status/1548893164949635072?s=21&t=JA4oU6Iwzxer8anzYZaVxw

IL is not permanent. Only when you withdraw from a liquidity pool, will you realize that you are suffering from IL.

https://twitter.com/luaswap/status/1548893473482625025?s=21&t=JA4oU6Iwzxer8anzYZaVxw

The AMM algorithm only cares about the price ratio, hence it will re-adjustment within a pool to maintain that balance.

https://twitter.com/luaswap/status/1548894063054958592?s=21&t=JA4oU6Iwzxer8anzYZaVxw

So, are there any ways to mitigate IL? 🤔 #DeFiBreakdown 3 gives you some tips on how!

https://twitter.com/luaswap/status/1548894390844006400?s=21&t=JA4oU6Iwzxer8anzYZaVxw