So in essence you make a hedge between the 2 pairs. If one of them goes crazy up or down you will only get half of the cost/loss of that asset compared to the other asset. And if both goes up your golden. But if one goes down and the other one goes up you'll get the midrange of that. Correct?
dont let impermenant loss scare you! If one side of your pair increase by 15X then you will have tons of reward tokens & interest from fees that will increase in value over time as well. If one side of your pair decrease in value you wont be in drawdown; instead, you will still gain reward tokens plus interest from fees. Use the profits from your Yield LP earnings to invest into other cryptocoins, lend to borrowers for interest, or hold your reward your LP reward tokens while it increase in value over time. Yield LP is not a meant to cashout when a coin reach 50X. Yield LP earnings allows us to invest into other projects or coins without using or risking our own capital for long term growth. hope this help out!
It's "impermanence loss", not "impermanent loss". The wrong term has been propagated and made popular. "Impermanent loss" means that the loss is not permanent. As opposed to a loss caused by impermanence of the asset value. Please take note and don't follow the crowd heading in the wrong direction just because that's where the herd goes!
Im not sure but did this video kind of tell you not to do DeFI since you will lose money no matter what direction the cryptos go? Why would someone do this, its better just let them be in wallet or get money from staking. In DeFi your loss (you would gain more if just keep them in wallet) is quaranteed no matter where the price goes.
You lose money if the prices of your pair *diverge* by a lot from your entry point. If they move together, you're fine. If they go to the moon together, you're great.
@@flangeinspector9959 Even if they both fall it can be good if they fall in tandem, your fee collection might offset losses enough so that you still come out ahead.
@@EileenTheCr0w hello there so when you watch for example. Btc / link chart you need it to remain similar. How can they both moon? You mean in USD value and in ratio value also?
dont let impermenant loss scare you! If one side of your pair increase by 15X then you will have tons of reward tokens & interest from fees that will increase in value over time as well. If one side of your pair decrease in value you wont be in drawdown; instead, you will still gain reward tokens plus interest from fees. Use the profits from your Yield LP earnings to invest into other cryptocoins, lend to borrowers for interest, or hold your reward your LP reward tokens while it increase in value over time. Yield LP is not a meant to cashout when a coin reach 50X. Yield LP earnings allows us to invest into other projects or coins without using or risking our own capital for long term growth. hope this help out!
@@BigHushAffiliate euphemism for bag holding.. in accounting terms it's a yet unrealized loss, the capital loss can only be realized once you withdraw the cash, so far as you don't withdraw it's all still theoretical
What happens if the price of your crypto increases? Will you then get a gain when you remove your crypto from the pool? If that is the case it should be called "impermanent loss/gain".
since you're providing two cryptos, these balance out and there will always be a loss if they aren't valued the same as when you provided the liquidity. Best-case scenario is you make money, but not as much money as you could have if you didn't provide the liquidity. Of course, the benefits to providing liquidity is that you receive a cut of the transfer fees
@@TheIngPin wrong. What if you did dai / eth pair at the start you would have lost most of your ETH and ended up with a bag of dai when ETH appreciated more
I could be wrong but it sounds like impermanent lose is that same as investing in a coin and if the price goes down your money goes down but if the price goes up your money goes but as long as you sell high you profit
Impermanent loss: The value of your cryptocurrency could rise or fall while it is staked, creating temporarily unrealized gains or losses. These gains or losses become permanent when you withdraw your coins, and may result in you having been better off if you'd kept your coins available to trade if the loss is greater than the interest you earned.
so what do i do if at the moment the value of the crypto i staked with a stable coin is way down and the amount of my stablecoins as well lost in value. do i just wait till it goes back up to get back what i staked in stableccoins?
dont let impermenant loss scare you! If one side of your pair increase by 15X then you will have tons of reward tokens & interest from fees that will increase in value over time as well. If one side of your pair decrease in value you wont be in drawdown; instead, you will still gain reward tokens plus intetest from fees. Also, the only time you should cashout into USD is if the dollar index is strong, a million dollars on a weak dollar index is not the same in value. so if blue chip crypto currencies are at an all time high then the dollar index is typically weaker in value.
Where the money goes - it's the same if Alice sell her 0.5 eth in the middle of the road (actually when price was 200), but here the "sell" is done by someone else
@@BigHushAffiliate Not really, I'm still baffled. All I see is, she should leave her funds in, and never take them out... gaining compounded interest. But what good is that, if you want to spend or transfer funds to another trade... :)
on many exchanges you receive a portion of the trading fees in whichever token is on the exchange. For example, uniswap rewards LP providers with an 0.3% trading fee paid by the buyer. So the pool would split that depending on how much of the pool you own. A lot of times, this makes up for any impermanent loss.
