How Does a Pegged Asset Pair (Like wBTC/renBTC) Minimize IL?

A pegged asset pair, where both tokens are designed to maintain a 1:1 price ratio (e.g. two different forms of Bitcoin on the same chain), significantly minimizes impermanent loss. Since the price ratio rarely deviates, the condition for IL is largely absent.

This allows LPs to earn high fees with minimal risk of divergence. Such pools often use a constant sum curve instead of a constant product curve.