When you do liquidity mining, you need to know about impermanent loss. In this video I explain how decentralized exchanges work, what impermanent loss is and how to deal with it.
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Show notes:
How to use the DeFiChain mobile wallet: https://www.youtube.com/watch?v=CDxQmtbfID8
Here’s a list of all my videos about DeFiChain & Cake DeFi:
https://www.youtube.com/playlist?list=PL3q6QaeUG5KX5oG0JyAlFBBJ2QAVK7nRT
Sign up for Bittrex with my link: https://bittrex.com/discover/join?referralCode=4GP-KDW-0TL
Sign up for KuCoin with my link: https://www.kucoin.com/ucenter/signup?rcode=rBEB6BY
Links:
- Impermanent loss calculator: https://decentyields.com/impermanent-loss-calculator
- DeFiChain DEX: https://defichain.com/dex/
- DeFiChain research paper: https://messari.io/article/defichain-decentralized-finance-secured-by-digital-gold
- Understanding Automated Market Makers: https://research.paradigm.xyz/amm-price-impact
- Impermanent loss chart: https://pintail.medium.com/uniswap-a-good-deal-for-liquidity-providers-104c0b6816f2
0:00 Intro
0:39 What is a decentralized exchange?
3:47 How does a decentralized exchange actually work?
4:28 What are liquidity pools?
7:59 Price impact
10:08 Why impermanent loss exists
11:58 Impermanent loss calculator with real examples
15:01 Real world example from my own portfolio
17:48 Summary
