⚠️ IMPERMANENT LOSSES (IMPERMANENT LOSS): WHY THE PERCENTAGE IN THE POOL IS WASTED
When you add coins to liquidity pools (Liquidity Farming), a high % APY looks attractive. But there’s a hidden risk waiting for you — Impermanent Loss (Impermanent Losses).
❓ What is it in simple terms?
It’s the difference between the value of coins that you simply hold in your spot wallet (HODL) and the value of the same coins that are locked in a liquidity pool.
⚙️ How it works using the example of “Buy Cheaper”:
Imagine BTC currently costs $65,000, and you want to buy it for $60,000.
1. You open a Dual Investment subscription with an execution price of $60,000 at 20% APY.
2. Scenario A (Price drops to $60,000 or below): The system buys you BTC for $60,000 + pays out the accrued interest.
3. Scenario B (The price wasn’t reached and stays above $60,000): The purchase doesn’t happen, but you get your USDT back along with the paid interest %.
4. Result: The total value of your deposit increases, but if you had just held ETH on the spot, you would have earned significantly more.
⚠️ Remember: The losses are called “impermanent” until you close the position. If the price returns to the starting level, the losses will disappear.
#ImpermanentLoss #DeFi
When you add coins to liquidity pools (Liquidity Farming), a high % APY looks attractive. But there’s a hidden risk waiting for you — Impermanent Loss (Impermanent Losses).
❓ What is it in simple terms?
It’s the difference between the value of coins that you simply hold in your spot wallet (HODL) and the value of the same coins that are locked in a liquidity pool.
⚙️ How it works using the example of “Buy Cheaper”:
Imagine BTC currently costs $65,000, and you want to buy it for $60,000.
1. You open a Dual Investment subscription with an execution price of $60,000 at 20% APY.
2. Scenario A (Price drops to $60,000 or below): The system buys you BTC for $60,000 + pays out the accrued interest.
3. Scenario B (The price wasn’t reached and stays above $60,000): The purchase doesn’t happen, but you get your USDT back along with the paid interest %.
4. Result: The total value of your deposit increases, but if you had just held ETH on the spot, you would have earned significantly more.
⚠️ Remember: The losses are called “impermanent” until you close the position. If the price returns to the starting level, the losses will disappear.
#ImpermanentLoss #DeFi
