Question

What is impermanent loss in DeFi?

Answer 1

Impermanent loss in DeFi refers to the temporary loss of funds that liquidity providers may experience due to the fluctuation in the price of the assets they have provided as liquidity in a decentralized exchange (DEX). It occurs when the value of the assets changes while they are being held in the liquidity pool, resulting in a loss compared to simply holding the assets.

Answer 2

Impermanent loss in DeFi refers to the potential loss of funds that liquidity providers may experience when providing liquidity to a decentralized exchange (DEX). It occurs when the value of the tokens in the liquidity pool changes relative to when they were originally deposited, resulting in a loss compared to simply holding the assets.