DataDex
  • What is DataDex?
  • Core Features
  • How to Use DataDex
  • Tips for Maximizing Your DataDex Experience
  • Common Terms
  • Detailed Guide to Providing Liquidity on DataDex
  • Step-by-Step Guide to Providing Liquidity
    • Step 1 - Prepare Your Wallet
    • Step 2 - Access DataDex
    • Step 3 - Navigate to the Pool
    • Step 4 - Choose the Token Pair
    • Step 5 - Define the Price Range
    • Step 6 - Select the Fee Tier
    • Step 7 - Deposit Tokens
    • Step 8 - Position Management
  • Earnings from Liquidity Provision
  • What Happens if Price Moves Outside Your Range?
  • Withdrawing Liquidity
  • Risks of Providing Liquidity
  • Best Practices
  • Conclusion
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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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Last updated 5 months ago