/biz/ - Business & Finance

[Anonymous No.25422561]

someone come ponder this with me. impermenant loss is caused by arbitrage. the classic example is a pool with dai/eth. when eth appreciates 20%, the "price" of eth is discounted 20%, because dai in the pool appreciates 20% with it. however, dai is always available at $1 on other exchanges, so people can sell their dai at 1.2$ worth of eth to the pool and rebuy their dai at $1 on another exchange.

however, what if the token pair is not listed anywhere except uniswap? there is no arbitrage opportunity. you cannot access cheaper tokens on a cex, you have to be holding them before the event. and say you were already holding these tokens, you cannot rebuy them from a different exchange for a non-inflated price after you cash out on the eth pump on uniswap.

therefore, when eth pumps, if the token is listed solely on uniswap, people selling to access the "cheaper" eth have no arbitrage mechanism. meaning, they are selling simply because they want to realize the 20% token pump in price. meaning, they would have sold if the price increase was fully due to demand.

does this shake out weak hands? are small cap tokens only listed on uniswap arbitraged at all? i plan to do an investigation of a few small cap solo dex tokens to see the correlation between the eth/token price and the usd/token price. if they are significantly uncorrelated, it means that pumps from eth are not immediately sold off by token holders.

i suspect that most small cap are inflationary and people dump their rewards on any 10% pump in price, demand related or eth related, meaning that appreciations in eth alleviate selling pressure. anyone have any ideas? am i crazy?

[Anonymous No.25422667]

[Anonymous No.25422722]

>>25422561
... what?

[Anonymous No.25423016]

Something needs to be done about impermanent loss. you can get recked providing liquidity on a pair vs just holding the token that moons.