Oct 17, 2023 · Learn about Impermanent Loss, a crucial concept in DeFi liquidity pools, and how to navigate and leverage it. Impermanent Loss (IL) refers to the temporary decrease in value experienced when providing liquidity to a decentralised exchange (DEX) or yield-farming protocol in the DeFi space.

Nov 6, 2023 · How to Avoid Impermanent Loss. There are three ways to mitigate the risks associated with impermanent loss. 1. Use Stablecoins. The most straightforward way to avoid impermanent loss is to provide liquidity in stablecoin pools.

Apr 10, 2023 · Impermanent Loss is a temporary loss in value occurring when the two assets that you provide liquidity for change in price relative to each other. If you have no idea what any of this means, check out our article on Liquidity Pools here.

Jun 27, 2024 · Impermanent loss refers to a temporary unrealized loss of capital value that arises when providing liquidity to AMM protocols. In its simplest form, impermanent loss is the difference in...

Apr 25, 2025 · Why it can hurt: If the price moves outside of your chosen range, your liquidity becomes inactive, you stop earning fees, and your Impermanent Loss can be magnified compared to a full-range pool, as you’ll end up holding only the asset that dropped in price (if price goes below your range) or only the asset that increased (if price goes above ...

Feb 24, 2024 · Impermanent loss is a common challenge for liquidity providers in decentralized exchanges. It occurs when the price of assets in a liquidity pool changes over time, resulting in a loss of value for the liquidity provider.

Feb 3, 2025 · Impermanent loss occurs when the price of deposited assets in a liquidity pool changes relative to when they were deposited, leading to potential financial losses compared to simply holding the assets. This article explains how impermanent loss works, why it happens, and the best strategies to minimize risk while maximizing returns. 1.

Sep 13, 2024 · Impermanent loss refers to the loss that liquidity providers (LPs) might experience when they supply assets to a DeFi liquidity pool, compared to simply holding those assets outside the pool. This phenomenon occurs due to the fluctuations in the …

Apr 24, 2025 · These liquidity pools enable decentralized, trustless trading, but the value of the deposited assets can fluctuate significantly due to market volatility. This leads to impermanent loss. What is Impermanent Loss? Impermanent loss occurs when the price of the tokens in the liquidity pool changes compared to the price at the time of deposit.

Nov 21, 2024 · One effective strategy for managing impermanent loss, without relying on stable asset pairs, is to use correlated assets for liquidity provision. For instance, pairing stETH/ETH, this way you can enjoy the higher yields of liquidity provision in a volatile asset with lower risks of impermanent loss.