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Impermanent Loss - Deep dive
I’m kind of obsessed with this stuff, and I believe @Bitcoin_Sage too
Judging LPs using IL is little bit like hindsight trading, we are comparing our current results with imaginary scenario, which is unrealistic, misleading and pointless.
I’m kind of obsessed with this stuff, and I believe @Bitcoin_Sage too
Judging LPs using IL is little bit like hindsight trading, we are comparing our current results with imaginary scenario, which is unrealistic, misleading and pointless.
We initially don’t know which side of the pair will run harder, but then we look at IL and we start to think that we did something wrong. No, we didn’t do anything wrong, we gave our best shot, and that’s the result. We collect this experience and adjust accordingly.
It’s important to understand IL, but at the same time it’s important not to focus too much on it and just trust the system.
@thorchain_org system is designed to offset IL, if we allow LPs to run long enough, which is the key here.
And from what we can see so far, it works.
@thorchain_org system is designed to offset IL, if we allow LPs to run long enough, which is the key here.
And from what we can see so far, it works.
There are certain basic rules though.
Deeper pools are less risky.
Illiquid pairs with very little price action won’t do well.
It’s expected that $Rune will increase a lot in the coming months/years, so it’s good to pair it with a coin that can keep a similar pace.
Deeper pools are less risky.
Illiquid pairs with very little price action won’t do well.
It’s expected that $Rune will increase a lot in the coming months/years, so it’s good to pair it with a coin that can keep a similar pace.
BEPswap currently doesn’t offer a big choice, it’s limited by Binance chain, so there are only few coins which are capable of following Rune’s pace, and I would single out ETHBULL and BTCBULL here.
Once we get ERC20 integration, we will have more options, like YFI, AAVE, SNX...
Once we get ERC20 integration, we will have more options, like YFI, AAVE, SNX...
