Why is my dmatic/dfi pool value going down despite prices

Question

DeFiChain - International

Teo Zhong Meng

Why is my dmatic/dfi pool value going down despite prices

going up?

#blockchain #cryptocurrency #defichain #english

0

13.09.2023

2 ответов

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Teo Zhong Meng Автор вопроса

Zachary Chan
What are you looking at? You LP Token value is dif...

Hmm but isnt the value of liquidity pool based on the value of both tokens? From the time i add to the pool, the value of the lp token seems to drop despite both tokens increasing

0

13.09.2023

Zachary Chan · Accepted Answer

What are you looking at? You LP Token value is different from individual Coin value. In a liquidity pool, your coins are deposited 50:50 and you are given in return an LP token that represents your share in the pool. This is like your receipt. When you exit the pool, you redeem these shares back to the individual tokens with 50:50 again, except this time, the quantity may be different from when you entered due to AMM balancing. Thus, the LP token’s value will change not directly based just on the market value of the coins, but based on overall balance in the pool. There are various formulas you can calculate yourself the value of any LP Token based on certain information in the pool. One is 1 LP Token = Total value of liquidity pool / total supply of LP Tokens Another is 1 lp token = 2*sqrt(token1*token2)

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Why is my dmatic/dfi pool value going down despite prices

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