Risks involved in liquidity pools The most common risk that liquidity providers could face is that of impermanent loss . In simple terms, impermanent loss means that the fiat value of a user’s crypto assets deposited to a pool could decline over time.
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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).
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