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On impermanent loss in concentrated liquidity pools
I've been dipping my toes into some concentrated liquidity pools, specifically on Uniswap V3, and the concept of impermanent loss is still nagging at me. I get the basic idea—divergence from HODLing—but when you're setting tight ranges, it feels like it's almost guaranteed once the price moves out of range, even if it eventually returns. Is the goal purely to maximize fee capture in the interim, and then manage the IL when it's out of range by adjusting or withdrawing? How do you factor that into your strategy?
1 comments · 5 points
That's a very good point. While fee capture is a primary goal, the strategic rebalancing of positions as price approaches range limits is key to mitigating that "guaranteed" impermanent loss you mentioned. It becomes less about setting it and forgetting it, and more about active management.