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

**Published:** 2025-12-04
**Author:** Greeks.live
**Categories:** Path

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## 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.

- [Explain the Difference between a Constant Product Market Maker and a StableSwap Market Maker](https://learn.greeks.live/path/explain-the-difference-between-a-constant-product-market-maker-and-a-stableswap-market-maker/)

- [What Is the Concept of a ‘Sidechain’ and How Does It Rely on Cryptographic Security?](https://learn.greeks.live/path/what-is-the-concept-of-a-sidechain-and-how-does-it-rely-on-cryptographic-security/)

- [What Is a Stablecoin Liquidity Pool and How Does It Mitigate Impermanent Loss Risk?](https://learn.greeks.live/path/what-is-a-stablecoin-liquidity-pool-and-how-does-it-mitigate-impermanent-loss-risk/)

- [How Does the Volatility of the Collateral Asset Affect the Required Collateralization Ratio?](https://learn.greeks.live/path/how-does-the-volatility-of-the-collateral-asset-affect-the-required-collateralization-ratio/)

- [How Does the Peg of a Stablecoin Affect Its Use in Derivatives Settlement?](https://learn.greeks.live/path/how-does-the-peg-of-a-stablecoin-affect-its-use-in-derivatives-settlement/)

- [How Is the Market Cap to TVL Ratio Used in Valuation?](https://learn.greeks.live/path/how-is-the-market-cap-to-tvl-ratio-used-in-valuation/)

- [How Do Stablecoin Pools Minimize the Risk of Impermanent Loss?](https://learn.greeks.live/path/how-do-stablecoin-pools-minimize-the-risk-of-impermanent-loss/)

- [Why Is Minimizing Market Impact a Critical Concern for Institutional Crypto Investors?](https://learn.greeks.live/path/why-is-minimizing-market-impact-a-critical-concern-for-institutional-crypto-investors/)

## Glossar

### [Constant Sum Curve](https://learn.greeks.live/area/constant-sum-curve/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Equilibrium ⎊ ⎊ A Constant Sum Curve, within cryptocurrency options and derivatives, represents a theoretical price relationship where gains for one participant are directly offset by losses for another, maintaining a fixed total value.

### [Pegged Asset](https://learn.greeks.live/area/pegged-asset/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Definition ⎊ A Pegged Asset is a cryptocurrency or digital token whose value is designed to remain stable relative to another asset, typically a fiat currency like the US dollar, a commodity, or a basket of assets.

## Discover More

### [What Are the Limitations of Applying QTM to Non-Currency-like Utility Tokens?](https://learn.greeks.live/path/what-are-the-limitations-of-applying-qtm-to-non-currency-like-utility-tokens/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Are the Limitations of Applying QTM to Non-Currency-like Utility Tokens?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Visualization-of-Crypto-Derivatives-Spreads-Through-Overlaid-Momentum-Curves.webp)

QTM is limited for non-currency tokens because low velocity and abstract PQ violate the model's assumptions.

### [How Does a Derivative like a Futures Contract on a PoS Token Interact with the Risk of Slashing?](https://learn.greeks.live/path/how-does-a-derivative-like-a-futures-contract-on-a-pos-token-interact-with-the-risk-of-slashing/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Derivative like a Futures Contract on a PoS Token Interact with the Risk of Slashing?](https://learn.greeks.live/wp-content/uploads/2025/10/Conceptualizing-Decentralized-Finance-Protocol-Governance-Through-Spherical-Derivative-Structures.webp)

Futures contracts on PoS tokens price in the risk of slashing, trading at a discount if systemic risk is high, or used by traders to hedge against a price collapse.

### [How Are Financial Derivatives Related to the Volatility of Major Cryptocurrencies like Ethereum?](https://learn.greeks.live/path/how-are-financial-derivatives-related-to-the-volatility-of-major-cryptocurrencies-like-ethereum/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Are Financial Derivatives Related to the Volatility of Major Cryptocurrencies like Ethereum?](https://learn.greeks.live/wp-content/uploads/2025/10/Aerodynamic-Control-Surface-Hinge-Mechanism-Simulation-Data-Fidelity-in-Digital-Asset-Hedging-Instruments.webp)

Derivatives like options and futures are used to speculate on or hedge against the high price volatility of crypto assets like ETH.

### [How Does the Black-Scholes Model Account for the Probability of a Catastrophic Event like a 51% Attack?](https://learn.greeks.live/path/how-does-the-black-scholes-model-account-for-the-probability-of-a-catastrophic-event-like-a-51-attack/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does the Black-Scholes Model Account for the Probability of a Catastrophic Event like a 51% Attack?](https://learn.greeks.live/wp-content/uploads/2025/10/Minimalist-Abstract-Rendering-of-Digital-Asset-Volatility-Surface-and-Implied-Volatility-Metrics.webp)

Black-Scholes assumes continuous price movement; traders adjust for catastrophic "jump risk" via implied volatility and skew.

### [How Does a "Constant Sum Market Maker" (CSMM) Attempt to Minimize Slippage for Stablecoin Pairs?](https://learn.greeks.live/path/how-does-a-constant-sum-market-maker-csmm-attempt-to-minimize-slippage-for-stablecoin-pairs/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a "Constant Sum Market Maker" (CSMM) Attempt to Minimize Slippage for Stablecoin Pairs?](https://learn.greeks.live/wp-content/uploads/2025/10/Intertwined-Quantum-Digital-Asset-Hedging-Mechanism-Through-Option-Strike-Price-Boundaries.webp)

CSMM uses a linear formula (x+y=k) for assets expected to be 1:1, allowing for large trades with minimal price impact and low slippage.

### [How Does a Decentralized File Storage Network like Filecoin Function?](https://learn.greeks.live/path/how-does-a-decentralized-file-storage-network-like-filecoin-function/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Decentralized File Storage Network like Filecoin Function?](https://learn.greeks.live/wp-content/uploads/2025/10/Futuristic-Digital-Asset-Propeller-Mechanism-Visualizing-Decentralized-Autonomous-Organization-Governance-Dynamics.webp)

Users pay miners to store data using cryptographic proofs of storage on a decentralized blockchain.

### [How Does a Private blockchain'S Consensus Mechanism Differ from a Public One like Bitcoin's Proof-of-Work?](https://learn.greeks.live/path/how-does-a-private-blockchains-consensus-mechanism-differ-from-a-public-one-like-bitcoins-proof-of-work/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Does a Private blockchain'S Consensus Mechanism Differ from a Public One like Bitcoin's Proof-of-Work?](https://learn.greeks.live/wp-content/uploads/2025/10/Layered-Hydraulic-Actuator-Seals-Illustrating-Decentralized-Finance-Derivative-Instrument-Construction.webp)

Private chains use permissioned consensus (like PoA or BFT) with known validators for speed; public chains use permissionless PoW for security.

### [How Do Concentrated Liquidity Positions in AMMs like Uniswap V3 Alter the Risk Profile of Impermanent Loss?](https://learn.greeks.live/path/how-do-concentrated-liquidity-positions-in-amms-like-uniswap-v3-alter-the-risk-profile-of-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Concentrated Liquidity Positions in AMMs like Uniswap V3 Alter the Risk Profile of Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Abstract-Convergence-Points-Visualizing-Impermanent-Loss-in-Decentralized-Exchange-Liquidity-Pools.webp)

Concentrated liquidity boosts fee earnings but amplifies impermanent loss risk if the price exits the provider's chosen range.

### [Why Is the Bid-Offer Spread Often Wider for Low-Cap Altcoins Compared to Highly Liquid Assets like Bitcoin Futures?](https://learn.greeks.live/path/why-is-the-bid-offer-spread-often-wider-for-low-cap-altcoins-compared-to-highly-liquid-assets-like-bitcoin-futures/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is the Bid-Offer Spread Often Wider for Low-Cap Altcoins Compared to Highly Liquid Assets like Bitcoin Futures?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Instrument-Modeling-for-Decentralized-Finance-Volatility-Surface-Calibration-Analysis.webp)

Low-cap altcoins have low liquidity and shallow order books, forcing market makers to widen the spread to manage high price impact risk.

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