Arbitrum Platform Helps Liquidity Providers Earn Money When Prices Fall

Fibo Quantum

Impermanent loss occurs when the pool rebalances. As the prices of the tokens in the pool diverge from their starting ratio, the liquidity provider position loses value. The higher the volatility, i.e. the more the ratio between the prices of the tokens diverges, the more the LP loses and the more likely they are to have negative returns. The loss is impermanent because it’s erased if the ratio returns to the starting position.

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