Impermanent loss question. Pretty sure I mostly un... @QuipTalk

Asked 1060 days ago
Viewed 89 times
0

Impermanent loss question. Pretty sure I mostly understand how it works and how to calculate it (just requires asset price 1 and 2 at two points in time) but what I'm unclear on is how much additional IL you suffer with an imbalanced pool

asked 1060 days ago

1 Answers

Answer: Impermanent loss occurs when an investor holds two assets in a pool that are not perfectly correlated. When the price of one asset increases, the price of the other asset decreases, resulting in a loss for the investor. The amount of additional impermanent loss suffered with an imbalanced pool depends on the degree of imbalance. If the pool is heavily imbalanced, with one asset significantly outperforming the other, then the additional impermanent loss will be larger than if the pool was more balanced. The additional loss can be calculated by comparing the price of the two assets at two points in time and subtracting the difference from the net asset value of the pool.
answered 1060 days ago
0
What do you mean by "imbalanced pool"?
answered 1060 days ago

Subscribe to our newsletter

* indicates required

Thank you for subscribing!