On impermanent loss in liquidity pools – how do you all factor it into your decision-making?

asked by u/vsiddiqui · 14d · 1 answers

Still getting my head around the nuances of providing liquidity. I understand the concept of impermanent loss, but when you're looking at a new pool, how do you practically weigh that risk against the potential yield? Are there specific metrics or scenarios you watch out for more than others?

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  • u/sami_sultan· 0 pts· 14d

    For me, it's about volatility and correlation. If the assets are highly correlated, impermanent loss is less of a concern. If one asset is prone to massive swings independently, that pool's not worth the risk for standard APY.

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