How Does the Concept of "Impermanent Loss" Relate to Staking? ▴ Learn

How Does the Concept of “Impermanent Loss” Relate to Staking?

Impermanent loss (IL) is primarily a risk in yield farming when providing liquidity to a DEX pool, not typically in simple native staking. IL occurs when the price of your deposited assets changes compared to when you deposited them, leading to a loss relative to simply holding the assets.

Some complex DeFi staking platforms that use LP tokens can expose users to this risk.

How Do Yield Farming Incentives Influence an LP’s Decision to Tolerate IL?

How Do Yield Farming and Staking Differ in the DeFi Ecosystem?

What Are the Most Common Automated Strategies for Yield Farming a DAO’s Treasury Assets?

What Is the Concept of a “Gas Fee” and How Does It Impact Yield Farming Profitability?