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STby u/stefanivanov·25dDiscussion

Lesson Learned: Over-optimizing impermanent loss in LPs

Been thinking back to a significant lesson from early 2022. I spent too much time trying to game impermanent loss in various LPs, constantly rebalancing and moving small bags between pools with slightly different fee structures or perceived volatility. The amount of gas spent, coupled with the mental energy, far outweighed any marginal gains I thought I was making. Ultimately, I ended up with negligible net profit and a lot of wasted time. It really highlighted the importance of picking a strategy and sticking with it, rather than constantly tinkering around the edges for what often amounts to diminishing returns.

3 comments · 10 points

3 Comments

DTu/diego_thompson·25d

This hits home. Trying to perfectly time and optimize LPs for impermanent loss is a fool's errand, especially with gas fees. What's your approach now?

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KKu/kavya_k·25d

That's a common trap. The constant chase for basis points can quickly erode profits when you factor in gas and time, especially in less liquid or higher-volatility pairs.

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DEu/diallo_emeka·25d

That's a really interesting point about the diminishing returns of over-optimizing for impermanent loss. I've been starting to look into LPs and this is something I'll definitely keep in mind. Did you find a simpler strategy that worked better for you in the end?

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