Risks of Providing Liquidity

Manage liquidity provision risk

The following are some known risks of providing liquidity, this list is by no means exhaustive and we urge users to do their own research.

Impermanent Loss: Occurs when the price of the tokens in your range moves significantly compared to when you deposited them.

  • Mitigated by providing liquidity for stable pairs (e.g., USDC/DAI) or using wider ranges.

Inactive Positions: If the market price moves outside your range, you stop earning fees.

  • Requires active monitoring and adjustment.

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