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Does the Use of an Oracle in an AMM Help to Prevent Impermanent Loss?

No, IL is an internal mechanism; an oracle's role is to provide a reliable external price feed to prevent manipulation.
Greeks.Live20.11.25

Does the Use of an Oracle in an AMM Help to Prevent Impermanent Loss?

No, the use of an oracle in a standard AMM does not prevent impermanent loss. Impermanent loss is an internal pool mechanism caused by arbitrage aligning the pool's ratio with the external market price.

An oracle provides an external, trusted price feed. While some AMMs (like those with dynamic fees) may use an oracle to inform their parameters, the oracle's primary role is to protect the protocol from price manipulation (e.g. flash loans) by providing a reliable price reference, not to stop the natural price divergence that causes impermanent loss.

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