2. How does Liquidity Pool Works? Most AMM and liquidity pool uses the constant product formula which is x * y = k . This is the formula that mathematically determines what the market price of the token in the pool should be.
Read moreHow is liquidity pool APR calculated?
Calculating LP Reward APR
Read moreWhat is an impermanent loss?
Impermanent loss (IL) is the risk that liquidity providers take in exchange for fees they earn in liquidity pools . If IL exceeds fees earned by a user when they withdraw, it means the user has suffered negative returns compared with simply holding their tokens outside the pool.
Read moreCan you lose money on Uniswap?
A new study by Bancor, a decentralized trading protocol, has shown that more than 50% of Uniswap liquidity providers are losing money due to a phenomenon known as impermanent loss (IL).
Read moreHow do I find out what my LP is worth?
vfat.tools
Read moreWhat does adding liquidity to Uniswap do?
Uniswap incentivizes users to add liquidity to trading pools by rewarding providers with the fees generated when other users trade with those pools . Market making, in general, is a complex activity.
Read moreWhat are Uniswap fees?
Every time a trade is executed on Uniswap, liquidity providers (LPs) earn fees proportional to the amount of liquidity they have supplied. This fee is usually set at 0.3% but can be as low as 0.05% for stable assets, and as high as 1% for more exotic pairs .
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