Yield farming lesson: The impermanent loss sting on a volatile pair
Was chasing those high APY numbers back in '21, setting up a liquidity pool on a new DEX with a $USDC-$ALTCOIN pair. The yield looked fantastic on paper, justifying the gas fees and the general complexity of monitoring it. However, I completely underestimated the impact of impermanent loss when $ALTCOIN started doing its parabolic thing. I saw the value of the pool grow in dollar terms, but when I eventually pulled liquidity, I realized the percentage gain was significantly less than if I had just held the $ALTCOIN itself and didn't touch the USDC. The high yield was attractive, but it obscured the underlying asset depreciation relative to the pair. It was a costly education on how that specific mechanism works in practice, not just in theory.