What is Impermanent Loss?
When Bancor launched the first DeFi AMM, we immediately saw a tragic flaw in our invention: That when a coin moons, investors are prone to lose money, fast.
It’s called "Impermanent Loss” and it’s responsible for wiping out billions in crypto gains every year.
Here's how it works
You want to make money on the tokens you own. So you look for a place to stake them.
You hold the token inside a liquidity pool.
Your money facilitates trading and generates fees from traders.
A token may go up or down in price.
That volatility encourages trading which generates fees.
But it’s that same volatility that can incur massive value loss in your holdings.
Because as your tokens move in price, they can be automatically sold at a discount or bought at an inflated price.
The result is you can lose money instead of earning!
It’s a sad reality of most DeFi protocols - even if your tokens increase in price, you can still lose big time.
This is called “Impermanent Loss”
We know, it’s an awkward name, but welcome to Crypto.
We designed a system called “Safe Staking”
The first technology that protects your holdings no matter how your token moves. So you can earn high yield with less risk.
Now that you understand it, stop worrying about impermanent loss.
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