@fredericsita
What is impermanent loss in DeFi?
Impermanent loss happens when providing liquidity to AMMs (automated market makers).
Cause:
Asset price changes affect liquidity pool balance.
Worse than simply holding tokens.
Mitigation:
Choose stablecoin pairs.
Use protocols with impermanent loss protection (e.g., Bancor).
Liquidity providers must weigh rewards against potential losses.
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