I have a question. Not sure if it is OK

Question

I have a question. Not sure if it is OK

to ask here. If you are staking LP - one token is stable coin and the other is a normal token. Can you suffer impermanent Loss and by what percent would the other token have to drop in value for this to happen?

#atom #blockchain #cryptocurrency #english

0

20.03.2022

5 ответов

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O’Bienne! Hindsight |

Andy
It depends on the cryptocurrency you have paired w...

Hey there clippy

0

20.03.2022

Christopher Muhanganei

Andy
It depends on the cryptocurrency you have paired w...

That is correct but there is more to this in that the loss on the appreciating asset can be offset by rewards received from LP . So Luna example came about because Luna mooned, and it got sold to balance the paring with UST. The opposite is quite nice if you are bullish on the asset that's paring with stable in a bear market and your goal is to pick up as many Luna as possible. I was on UST/osmo pair and ended up with more osmo because it's been heading downwards lately. I think the key to LP is to have a an around your rewards, even better if there are extra incentives like a share on a coin you are bullish on for a good number of epoch too. All these extras help minimize the impact of IL

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20.03.2022

Max Power

Andy
It depends on the cryptocurrency you have paired w...

Higher pool APR doesn't mean higher risk but it also doesn't negate the possibility of the tokens being junk and you are losing value faster than you are gaining reward. A good thing to remember is not to just blindly chase high APR. Invest in projects you believe in.

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20.03.2022

Perry1 Автор вопроса

Andy
It depends on the cryptocurrency you have paired w...

Hello Andy yes I generally prefer single token staking - what I have observed is that if the other coin rises in value then the value of your LP increases - the problem is when the price of the other coin drops. I think up to about 10% is OK but after that serious impermanent loss can occur. —- I have an idea for an LP that cannot incur impermanent loss but I am not a dev so I do not know if it will ever be developed or if it is possible. Maybe I will find a way to do it - but first have to find someone I can trust.

0

20.03.2022

Andy · Accepted Answer

It depends on the cryptocurrency you have paired with the stablecoin. If you go for a really volatile one (and to be fair, a lot of them are) then it's value will change quite a bit while the stablecoin stays the same, which can cause impermanent loss. Someone posted about this on Reddit a few days ago, because they paired Luna with a stablecoin in an LP and ended up with more of the stablecoin than LUNA, so they lost money. I can't tell you about percentages, but the rule of thumb is that the higher the APY % the higher the risk.

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I have a question. Not sure if it is OK

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