Don’t rush to memorize the definition: what is impermanent loss?
Using the x × y = k model, when one token doubles in price relative to the other, impermanent loss is about 5.7%.
The further the price ratio between the two tokens deviates, the greater the impermanent loss; when the price ratio returns to its level at the time of deposit, this loss disappears.
When you come across a pool with an unbelievably high APY, take a closer look at how much of the return comes from token rewards and whether the token itself might keep falling in price.
For comparison, the market screen shows: $UNI at 7.21, 24h -0.93%.
#UNI
I can’t guarantee I’m right—make your own decision.
Using the x × y = k model, when one token doubles in price relative to the other, impermanent loss is about 5.7%.
The further the price ratio between the two tokens deviates, the greater the impermanent loss; when the price ratio returns to its level at the time of deposit, this loss disappears.
When you come across a pool with an unbelievably high APY, take a closer look at how much of the return comes from token rewards and whether the token itself might keep falling in price.
For comparison, the market screen shows: $UNI at 7.21, 24h -0.93%.
#UNI
I can’t guarantee I’m right—make your own decision.