While chatting with friends, I realized quite a few people are confused about this.
The more the price ratio between the two tokens changes, the greater the impermanent loss. If their relative prices return to the levels they were at when you added them to the pool, the loss on paper disappears.
When prices change, arbitrageurs buy the token that's gone up from the pool and leave the one that's gone down, so the pool ends up with less of the token that rose.
Here’s a current price: $UNI is quoted at 7.367 (24h +5.11%).
What do you think? Share your thoughts in the comments.
#UNI
The more the price ratio between the two tokens changes, the greater the impermanent loss. If their relative prices return to the levels they were at when you added them to the pool, the loss on paper disappears.
When prices change, arbitrageurs buy the token that's gone up from the pool and leave the one that's gone down, so the pool ends up with less of the token that rose.
Here’s a current price: $UNI is quoted at 7.367 (24h +5.11%).
What do you think? Share your thoughts in the comments.
#UNI