impermanent loss
Coverage of impermanent loss in the Nexus archive.
- Would DEX Aggregators Route Through These New Pairs?
A developer proposes a protocol using liquid-locked tokens (liTOKENs) to enable liquidity providers to earn yield while mitigating impermanent loss. The protocol aims to incentivize DEX aggregators to route trades through new token pairs by maintaining a price spread that benefits both traders and liquidity providers.
- How do you calculate IL before entering a pool?
The author opened a HYPE/USDC position on HyperEVM and is seeking advice on how to calculate Impermanent Loss before entering a pool. They are looking for a formula, tool, or rule of thumb to estimate if the APR covers the IL. The author is unsure about the best approach to take.
- My DeFi position just showed a 40% loss that disappeared an hour later. What is impermanent loss and why did no one explain this before I put money in POST
The user's DeFi position showed a 40% loss that disappeared an hour later, leaving them confused about impermanent loss. The user had provided liquidity on a DEX two weeks prior and was earning fees before the sudden loss. The loss then decreased to 8% after an hour.
- How are you mitigating Impermanent Loss (IL) and AMM structural risks in your staking modules?
The article discusses mitigating Impermanent Loss and Automated Market Makers structural risks in staking modules, including approaches like variable fee models and delta-neutral hedging protocols. It also touches on real-time risk parameters and adjusting reward token emission. The author seeks technical insights from other developers and architects.
- how do you guys reduce fees and impermanent loss when providing liquidity?
A Reddit user discusses challenges with liquidity provision in DeFi, including fees, slippage, MEV, and impermanent loss during rebalancing, which negatively impact returns. They criticize managers for charging rebalance fees and inefficient swap strategies that lock in losses.
- My journey with automated Wick and Wait Strategy at Pecunity since 40 days
A 40-day test of an automated 'wick and wait' liquidity provider (LP) strategy on Pecunity showed passive fees nearly closed the profit gap compared to holding BTC, with reduced downside risk. The strategy reduced BTC exposure by half while generating $47 in fees (~33% APR), resulting in a $85 total profit vs. $91 from holding BTC.
- is LP farming better than day trading in crypto?
The article discusses a user's uncertainty about whether liquidity provider (LP) farming in crypto is a better option than day trading. The user acknowledges LP farming's potential stability but expresses confusion over risks like impermanent loss and range management, fearing financial loss.
- has anyone here used gamma or arrakis for uniswap v3 LP? which one is better
The article compares Gamma and Arrakis for Uniswap V3 liquidity providing (LP), noting Arrakis is tailored for protocols/DAOs while Gamma is user-focused but has rebalancing issues. The user is uncertain due to potential impermanent loss and fees with Gamma's rebalancing.
- My current risk rules for DeFi yield farming in 2026
The article outlines strict risk management rules for DeFi yield farming in 2026, including limiting DeFi exposure to 15-20% of a portfolio, capping single protocol allocations at 5%, prioritizing audited protocols with high TVL and proven track records, avoiding unsustainable APYs above 30-40%, and conducting regular manual reviews. The author emphasizes a conservative approach to mitigate risks like smart contract vulnerabilities and impermanent loss, which has reduced drawdowns while maintaining decent yields.