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How Do ‘Stablecoins’ Reduce Impermanent Loss?

Stablecoins minimize impermanent loss because their stable price peg prevents significant price ratio divergence.
Greeks.Live17.11.25

How Do ‘Stablecoins’ Reduce Impermanent Loss?

Stablecoins reduce impermanent loss because their price is pegged to a stable asset, usually the US Dollar. When two stablecoins or a stablecoin and a pegged asset are paired in a pool, the price ratio is designed to remain near 1:1, minimizing the price divergence that causes impermanent loss.

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