Impermanent Loss
By CoinGecko | Updated on Aug 12, 2021
Impermanent loss may occur when you provide liquidity to the AMMs. Impermanent loss is similar to measuring your opportunity cost of holding the token within the pools versus holding them in your wallet. Note: the loss is not realized until you remove your tokens from the liquidity pool. The higher the divergence between the value of holding your tokens in the pool and wallet, the higher is the impermanent loss.
Related Terms
Impermanent Loss
Temporary loss of funds due to volatility leading to divergence in price between token pairs provided by liquidity providers.
Ledger
A record of financial transactions that cannot be changed, only appended with new transactions.
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Non-Fungible Tokens (NFT)
They are collectible elements within the Ethereum blockchain under ERC-721, where each token refers to a single element with a certain value
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