[ 3 / biz / cgl / ck / diy / fa / ic / jp / lit / sci / vr / vt ] [ index / top / reports ] [ become a patron ] [ status ]
2023-11: Warosu is now out of extended maintenance.

/biz/ - Business & Finance

Search:


View post   

>> No.18768161 [View]
File: 80 KB, 765x614, Impermanent Loss.png [View same] [iqdb] [saucenao] [google]
18768161

bump
>Bancor V2 eliminates the risk of impermanent loss for any ERC20 token, including volatile tokens, so long as the token doesn’t fail. Bancor V2 does this by enabling the creation of AMMs with pegged liquidity reserves. This type of AMM holds the relative value of its reserves constant using prices from Chainlink’s secure and reliable oracles.
My understanding of impermanent loss is that since normally liquidity providers have to split their liquidity into 2 tokens for a given AMM pool, they sacrifice their 100% long position into 50/50 long/short in exchange for collecting trading fees, and if the price of the long asset moves too much in either direction then the fees generated by providing liquidity are exceeded by the gains made by a 100% long or 100% short strategy, as seen here

https://alfablok.substack.com/p/coming-soon

From my understanding, the only way to eliminate this so called impermanent loss is to prevent liquidity providers from ever taking a short position at all when they provide assets to the pool. What's more, BancorV2 claims to be allowing for liquidity provision to a given pool of up to 100% of single token
>Liquidity providers no longer need to hold a separate reserve token. They can select their exposure to any token in the AMM, from 0–100%.
HOW DOES THAT EVEN WORK??

Navigation
View posts[+24][+48][+96]