Impermanent Loss: What Liquidity Providers Should Know

Providing liquidity isn’t just about earning it comes with dynamics every user should understand.

On STONfi, users add token pairs into pools on The Open Network to support smooth swaps and earn fees. But as market prices change, the balance of assets in the pool adjusts automatically.

This shift can lead to what’s known as impermanent loss a situation where the value of your pooled assets differs from simply holding them outside the pool.

It’s important to note that this effect depends on price movement, and in some cases, earned fees can help offset it.

Understanding impermanent loss helps users make more informed decisions when providing liquidity and managing their positions in a changing market.