What are the losses that liquidity providers may experience when the exchange rates for token trading pairs on a DEX increase significantly?

OverWallet is a blockchain entry with a soft-landing reward system.

You can get point rewards by completing daily activities and missions like quizzes.

The Blockchain Learning Hub has daily quizzes to enhance your blockchain knowledge.

To get started, sign up using this link mobile.over.network/en/invite/3SDAUQX99B or use “3SDAUQX99B” as the invitation code.

When you sign up using the invitation code, you’ll get a 1,000 P bonus.

To begin a quiz, open the OverWallet app, select the “Missions” tab, and select “Daily quiz”.

In this guide, you’ll learn the answer to “What are the losses that liquidity providers may experience when the exchange rates for token trading pairs on a DEX increase significantly?” in OverWallet.

What are the losses that liquidity providers may experience when the exchange rates for token trading pairs on a DEX increase significantly?

Question: What are the losses that liquidity providers may experience when the exchange rates for token trading pairs on a DEX increase significantly?

Answer: Impermanent Loss (IL).

Further reading

What do we call the entity that provides liquidity to the liquidity pool on a DEX?

What do we call the token trading pairs that DEX creates for AMM?

What is the ordering method used in DEX instead of the order book called?

Leave a Comment