Intermediate
Blockchain & Web3
Q55 / 100
What is "impermanent loss" in the context of liquidity pools?
Correct! Well done.
Incorrect.
The correct answer is A) A potential loss in value experienced by liquidity providers when the price ratio of the pooled assets changes compared to when they deposited
A
Correct Answer
A potential loss in value experienced by liquidity providers when the price ratio of the pooled assets changes compared to when they deposited
Explanation
When pooled asset prices diverge from the deposit ratio, the value of a liquidity provider's withdrawn assets may be less than if they had simply held the assets, hence "impermanent" (realized on withdrawal).
Progress
55/100