Understanding Liquidity Provision Risks


Being a Liquidity Provider (LP) in a DEX is a great way to earn passive income from trading fees. However, it is not without risks, specifically "Impermanent Loss." This happens when the price of the tokens in the pool changes significantly compared to when you deposited them. Before you jump into a high-APR pool, make sure you understand the underlying assets and the potential for price divergence. LPing is best suited for stable pairs or for tokens you plan to hold for a long time regardless of price swings
This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.
  • Reward
  • Comment
  • Repost
  • Share
Comment
Add a comment
Add a comment
No comments
  • Pin