Impermanent loss
Author
@cryptofreedman (cryptofreedman#2169)
Description
Impermanent loss is the difference between the value of a constant product automated market maker liquidity pool position and the value of holding the same amount of each token separately.
It occurs when the price differentials between the pooled tokens grow and necessarily emerges from the mathematics of constant product market making.
It is a “paper loss” in that it is only actualized by the removal of liquidity from the pool.
References
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