Liquidity protocol uses stablecoins to ensure zero impermanent loss
The cross-chain liquidity protocol has put special focus on user experience with a simple user interface without them having to deal with complex virtual networks. At a time when the decentralized finance (DeFi) protocols have seen a significant outflow of funds from the market, maintaining liquidity has become even more challenging. Liquidity plays a central role in the DeFi ecosystem, and many protocols over time have come up with various new solutions to keep liquidity pools brimming. The latest trend in the liquidity market is focused on cross-chain solutions.Many experts believe....
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Investors are often lured to DeFi by the four-digit APYs on offer, but in many instances, impermanent loss actually siphons away any potential profits investors might have accrued. Impermanent loss is one of the most recognized risks that investors have to contend with when providing liquidity to an automated market maker (AMM) in the decentralized finance (DeFi) sector. Although it is not an actual loss incurred from the liquidity provider’s (LP) position — rather an opportunity cost that occurs when compared with simply buying and holding the same assets — the possibility of getting less....
Read this guide to understand the risk, known as impermanent loss (IL), that liquidity providers take in exchange for fees earned in liquidity pools. How to avoid impermanent loss?Liquidity providers cannot avoid impermanent loss completely. However, they can use some measures to mitigate this risk such as using stablecoin pairs and avoiding volatile pairs.One strategy to avoid temporary loss is to choose stablecoin pairs that offer the best bet against IL since their value does not move much; they also have fewer arbitrage opportunities, lowering the risks. Liquidity providers using....
Bancor’s new liquidity mining strategy promises to bring organic on-chain liquidity and make DeFi staking easier for DAOs. Bancor, the first decentralized finance protocol to introduce liquidity pools, has come out with a new liquidity solution with the launch of its v3, called Bancor 3.Bancor 3 went live with a promise to offer protection against impermanent loss to liquidity providers. The new architectural changes promise to bring sustainable on-chain liquidity and make decentralized finance (DeFi) staking simpler for decentralized autonomous organizations (DAOs).The v3 project has....
Trader Joe says its Liquidity Book will mitigate the impermanent loss “suffered by so many liquidity providers on other DEXs” during times of market turbulence. Avalanche-based decentralized finance (DeFi) protocol Trader Joe claims it may have found a way to mitigate one of DeFi’s biggest weaknesses — impermanent loss. In a newly released white paper on Tuesday called the JOE v2 Liquidity Book, authored by Quant developers and researchers Adam Sturges, TraderWaWa, Hanzo and software engineer Louis MeMyself, the developers outlined the use of Liquidity Book (LB) with an additional variable....
Bancor’s approach to dealing withimpermanent loss on decentralized exchanges might have significant implications for idle altcoin capital. Bancor has released a status report for its v2.1 decentralized exchange upgrade covering the performance of its decentralized exchange over the last three months.According to the document, the total liquidity increased by almost 100% resulting in the platform earning about $1.12 million in cumulative swap fees.Bancor’s report noted that the fee earnings were more than five times the cost required for impermanent loss compensation for liquidity....