The profits from LP come from volatility, not price.
When volatility is high, fees are higher and market makers can make money; when volatility is low, trading volume shrinks and fee margins thin, but the calculation base for impermanent loss is still there—nobody wins.
So low volatility is bad news for market makers, but good news for holders—periods of grinding sideways are often accumulation before a major breakout.
This also explains a common misconception: many people take “stability” as a positive signal, but in the on-chain market-making business, stability means there is no profit to be made.
Because position types differ, the market conditions each side wants are completely opposite.
When volatility is high, fees are higher and market makers can make money; when volatility is low, trading volume shrinks and fee margins thin, but the calculation base for impermanent loss is still there—nobody wins.
So low volatility is bad news for market makers, but good news for holders—periods of grinding sideways are often accumulation before a major breakout.
This also explains a common misconception: many people take “stability” as a positive signal, but in the on-chain market-making business, stability means there is no profit to be made.
Because position types differ, the market conditions each side wants are completely opposite.