How Impermanent Loss Happens
Understanding Impermanent Loss in DeFi TradingUnderstanding impermanent loss in DeFi trading can be a crucial concept to grasp for those involved in decentralized finance. Impermanent loss occurs when the value of assets in a liquidity pool fluctuates, resulting in a loss of potential profits for liquidity providers. This phenomenon can happen due to price volatility in the market, causing the ratio of assets in the pool to change. As a result, traders may experience a decrease in their overall returns compared to simply holding the assets. It's essential for traders to understand how impermanent loss works to make informed decisions when participating in DeFi trading.The Mechanics Behind Impermanent Loss ExplainedImpermanent loss occurs when the price of a token changes significantly in a...








