How Does Impermanent Loss Relate to Liquidity Provision in DEXs? ▴ Learn

How Does Impermanent Loss Relate to Liquidity Provision in DEXs?

Impermanent loss is the temporary difference in value between simply holding assets and providing them as liquidity in an Automated Market Maker (AMM) pool. It occurs when the price of the deposited assets changes relative to when they were deposited.

If the price difference is significant, the loss can become permanent upon withdrawal. It is a key risk for liquidity providers.

What Is the Concept of “Impermanent Loss” in AMM Liquidity Provision?

Define Impermanent Loss and Its Calculation Basis

How Does Impermanent Loss Relate to Providing Liquidity for Derivative Trading on an AMM?

Define ‘Divergence Loss’ as an Alternative Term for Impermanent Loss