𝗘𝘃𝗲𝗿 𝘄𝗼𝗻𝗱𝗲𝗿𝗲𝗱 𝘄𝗵𝘆 𝗽𝗿𝗼𝘃𝗶𝗱𝗶𝗻𝗴 𝗗𝗲𝗙𝗶 𝗹𝗶𝗾𝘂𝗶𝗱𝗶𝘁𝘆 𝗰𝗮𝗻 𝘀𝗼𝗺𝗲𝘁𝗶𝗺𝗲𝘀 𝗹𝗲𝗮𝘃𝗲 𝘆𝗼𝘂 𝘄𝗶𝘁𝗵 𝗹𝗲𝘀𝘀 𝘃𝗮𝗹𝘂𝗲 𝘁𝗵𝗮𝗻 𝘀𝗶𝗺𝗽𝗹𝘆 𝗵𝗼𝗹𝗱𝗶𝗻𝗴? 𝗘𝗻𝘁𝗲𝗿 𝗜𝗺𝗽𝗲𝗿𝗺𝗮𝗻𝗲𝗻𝘁 𝗟𝗼𝘀𝘀 💧⚖️
𝘋𝘳𝘢𝘸𝘪𝘯𝘨 𝘧𝘳𝘰𝘮 𝘧𝘰𝘶𝘯𝘥𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘭𝘦𝘴𝘴𝘰𝘯𝘴 𝘰𝘯 #BinanceAcademy, 𝘩𝘦𝘳𝘦 𝘪𝘴 𝘺𝘰𝘶𝘳 𝘲𝘶𝘪𝘤𝘬 𝘭𝘪𝘲𝘶𝘪𝘥𝘪𝘵𝘺 𝘱𝘰𝘰𝘭 𝘣𝘳𝘦𝘢𝘬𝘥𝘰𝘸𝘯:
1️⃣ 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗜𝗺𝗽𝗲𝗿𝗺𝗮𝗻𝗲𝗻𝘁 𝗟𝗼𝘀𝘀?
• It happens when the price ratio of the tokens you deposited into an automated market maker (AMM) pool changes, so at withdrawal your assets may be worth less than if you had just HODLed them.
2️⃣ 𝗪𝗵𝘆 𝘁𝗵𝗲 𝗥𝗮𝘁𝗶𝗼 𝗠𝗮𝘁𝘁𝗲𝗿𝘀:
• AMMs price assets by the token ratio in the pool, so the bigger the price change in either direction, the larger the potential loss (around 5.7% for a 2x move, before fees).
3️⃣ 𝗪𝗵𝘆 𝗟𝗣𝘀 𝗦𝘁𝗶𝗹𝗹 𝗣𝗮𝗿𝘁𝗶𝗰𝗶𝗽𝗮𝘁𝗲:
• Trading fees can partly or even fully offset the loss, and stablecoin pairs tend to carry lower risk.
⚠️ 𝗥𝗶𝘀𝗸 𝗡𝗼𝘁𝗲:
The loss becomes permanent once you withdraw at a changed ratio, and even stablecoins can depeg.
Expand your technical literacy, weigh fees against price risk 📊
📖 Learn more on Binance Academy: https://www.binance.com/en/academy/articles/impermanent-loss-explained
Crypto involves risk, this is not financial advice, Always DYOR 💡
#ImpermanentLoss #DeFi #LiquidityPools #CryptoEducation
Follow me for more 💛
𝘋𝘳𝘢𝘸𝘪𝘯𝘨 𝘧𝘳𝘰𝘮 𝘧𝘰𝘶𝘯𝘥𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘭𝘦𝘴𝘴𝘰𝘯𝘴 𝘰𝘯 #BinanceAcademy, 𝘩𝘦𝘳𝘦 𝘪𝘴 𝘺𝘰𝘶𝘳 𝘲𝘶𝘪𝘤𝘬 𝘭𝘪𝘲𝘶𝘪𝘥𝘪𝘵𝘺 𝘱𝘰𝘰𝘭 𝘣𝘳𝘦𝘢𝘬𝘥𝘰𝘸𝘯:
1️⃣ 𝗪𝗵𝗮𝘁 𝗶𝘀 𝗜𝗺𝗽𝗲𝗿𝗺𝗮𝗻𝗲𝗻𝘁 𝗟𝗼𝘀𝘀?
• It happens when the price ratio of the tokens you deposited into an automated market maker (AMM) pool changes, so at withdrawal your assets may be worth less than if you had just HODLed them.
2️⃣ 𝗪𝗵𝘆 𝘁𝗵𝗲 𝗥𝗮𝘁𝗶𝗼 𝗠𝗮𝘁𝘁𝗲𝗿𝘀:
• AMMs price assets by the token ratio in the pool, so the bigger the price change in either direction, the larger the potential loss (around 5.7% for a 2x move, before fees).
3️⃣ 𝗪𝗵𝘆 𝗟𝗣𝘀 𝗦𝘁𝗶𝗹𝗹 𝗣𝗮𝗿𝘁𝗶𝗰𝗶𝗽𝗮𝘁𝗲:
• Trading fees can partly or even fully offset the loss, and stablecoin pairs tend to carry lower risk.
⚠️ 𝗥𝗶𝘀𝗸 𝗡𝗼𝘁𝗲:
The loss becomes permanent once you withdraw at a changed ratio, and even stablecoins can depeg.
Expand your technical literacy, weigh fees against price risk 📊
📖 Learn more on Binance Academy: https://www.binance.com/en/academy/articles/impermanent-loss-explained
Crypto involves risk, this is not financial advice, Always DYOR 💡
#ImpermanentLoss #DeFi #LiquidityPools #CryptoEducation
Follow me for more 💛
