How Does the Time Horizon of a Liquidity Provision Affect the Probability of Realizing a Loss?

A longer time horizon generally increases the probability of realizing a net gain, despite impermanent loss. This is because a longer period allows for more transaction fees to be collected, which can offset the IL.

However, a longer time horizon also increases the chance of a large, sustained price divergence, which could lead to a greater magnitude of IL. The risk is balanced by the potential for greater fee accumulation.