When I first got into crypto, I thought that dropping coins into a pool was basically the same as storing money in Yu’e Bao—fees would just grow slowly over time, and you could lie back and wait for the job to be done. Later I realized that the AMM curve is basically an automatic rebalancing machine: once the price moves, your position gets “sold high and bought low” along with it. When there’s no growth and everything just stays level, it still looks okay; but the moment there’s a one-sided market, impermanent loss will wipe out the fees completely—in plain terms, market making is trading volatility for income.

Recently, someone has also tried to explain crypto’s up-and-down moves by using ETF capital flows and a bit of the risk appetite in the US stock market. I can only take it as an emotional reference. If it’s really going to be put into practice, though, I still have to calculate based on how much volatility my own pool can tolerate. My approach is pretty straightforward: first, work out costs like gas/bridges/slippage. If the returns don’t cover it, I don’t mess with it. I’d rather make a little less than be an “automatic passive trader”… for now.