Reading Bi Farming｜Bin Newspaper #09・Feeling "impermanent loss" with actual cases

One day in the currency circle, one year in the world, capriciousness, Impermanent Loss , good poetry and good poetry - this article uses real cases to show you this proper term.

■ origin

I received 20 $RAC (raccoon coins) airdrops in Bibao #07 before, so I cut it in half and put it into JunoSwap's Juno + RAC liquidity pool. I suddenly thought that this pool is relatively simple, and it is a practical understanding and observation. Good material for "impermanent loss".

■ Data observation

I still remember the moment when the transaction was completed, the $RAC was cut into beautiful integers - 10 - so I was impressed, but the amount of $JUNO was not recorded; The observed " quantity change " of the two coins is written down:

• ❶ JUNO_0.431662 + RAC_11.023077
• ❷ JUNO_0.404109 + RAC_11.780540
• ❸ JUNO_0.414594 + RAC_11.485907
• ❹ JUNO_0.394830 + RAC_12.080336
• ❺ JUNO_0.393864 + RAC_12.110389

■ Practical case: impermanent loss

First of all, everyone should know that if you take the virtual currency in your hand to pledge (Stake), the amount of the principal will remain unchanged ; and when it is replaced by "market making" to provide liquidity (Liquidity Provider, LP), because your currency It is placed in the pool for users to exchange (Swap), so the amount of principal (two coins) increases one after another. For a more in-depth demonstration, please see What is impermanent loss? There is also an article that provides liquidity , but the article is complex and requires some patience.

＊

Going back to the word "impermanent loss", the mood is too abstract and poetic. As far as the original word Impermanent Loss is concerned:

The tendency to translate it as "non-permanent loss, non-permanent loss" would be more appropriate, the loss is temporary, it is on the book, and it is unrealized .

However, please allow this article to continue to follow this most common name.

In the most vernacular terms, it means the difference in market value between the two currencies in your hand when you "stand still vs assist in market creation" .

As far as the actual case is concerned, suppose I stopped my hands during the observation period ❶, took out the two coins, and simply held them from then on. , providing liquidity, this is "assisting market creation", so when it comes to the observation period ❺:

The exchange rate takes the current price of the text, so now my Juno + RAC liquidity pool "on the books (unrealized) " suffers an impermanent loss of 0.11777968 $UST.

＊

Although it does not move, in fact, A can take the dual currency to pledge, so that the market value will be higher; and the market value of B, who assists in market creation, already includes the earning of swap fees, but does not consider the additional rewards given by the JunoSwap platform. (Not yet open). If all aspects are really covered, whether B will have a "loss" or not .

🌱 Reflection on thematic writing is being serialized 👉 01 ｜ 02 ｜ 03 ｜ 04 ｜

🌱 Tracking [ Zhongshu Nervous System ] broadcast information is not missed👇
Good Books / Book Market News / Mind Map / Drift Books / Currency News

🌱 I am on other platforms👇
【 Facbook ｜ Mastodon ｜ Medium ｜ vocus ｜ Potato 】