Sunday Study: What is 'Impermanent Loss' and How to Protect Yourself?
If you have already provided liquidity in a DEX (Decentralized Exchange), you need to understand Impermanent Loss (IL). It occurs when the price of the two assets you deposited in a liquidity pool diverges. The further apart the prices move from each other, the greater your IL compared to simply holding (HODL) the two assets. New generations of DEXs aim to mitigate this with concentrated liquidity pools.
Before providing liquidity in UNI or $CAKE, understand the risks. Click on the cashtags to explore the liquidity pairs and analyze the volatility.