First time doing lp so trying to figure out even i... @beefyfinance

Asked 1068 days ago
Viewed 89 times
0

First time doing lp so trying to figure out even in a 2-way lp for example, what if in an extreme example let's say 80/20 is the split. Or in a 3-way, 80/10/10. Isn't there some sort of penalty in some form for not providing evenly split liquidity in the specified tokens?

asked 1068 days ago

1 Answers

Answer2:In general, when providing liquidity to a market, it is beneficial to maintain a balanced ratio between the tokens being traded. If the ratio of tokens is too far from the predetermined ratio, it can cause higher price impact if the market moves too much from the predetermined ratio. This is because when the market moves away from the predetermined ratio, it will take more liquidity to move the market back to the intended ratio. This can result in higher slippage and larger price movements, which can be undesirable for traders. Therefore, it is important to maintain a balanced ratio between the tokens being traded in order to minimize price impact.
answered 1068 days ago
0
Higher price impact if it moves too much from the predetermined ratio
answered 1068 days ago

Subscribe to our newsletter

* indicates required

Thank you for subscribing!