Recently, I’ve seen people say, “Just drop it into the pool and earn fees effortlessly.” Hearing that makes me feel a little uneasy. The AMM curve, put simply, is designed to keep forcing you to passively rebalance through price fluctuations: when prices rise, you end up selling at a bad time and “missing the top,” and when prices fall, you end up taking the bag. Impermanent loss isn’t some kind of mysticism—it’s the cost of having your liquidity move along with the price. Around the floor price, things look lively, but really you should pay attention to how deep the pool is and whether the activity is being pushed through by just a few trades.

Also, now the on-chain data tools/tags are being criticized as being laggy and even potentially misleading, and I agree with that point to a certain extent: don’t put too much faith in “smart money” labels. Whether the money is smart or not doesn’t really matter—what matters is whether the path/strategy can be replicated. In any case, before I provide liquidity, I first run through the worst-case scenario using the loss I can personally tolerate. Otherwise, earning a bit of fees isn’t worth it if I can’t sleep well.