What Is IMPERMANENT LOSS? DEFI Explained - Uniswap, Curve, Balancer, Bancor

[@Finematics]

❓Have you ever been affected by Impermanent Loss? 👍Hit the like button if you enjoyed this video 🐦Follow Finematics on Twitter ► twitter.com/finematics 💛Support Finematics on Patreon and join our Discord community ► www.patreon.com/finematics

[@90nomads]

I got wrecked on AMPL/ETH pool - such bad timing 😥

[@anon-jo5gm]

What happens in the "opposite" scenario where token A increases in price and token B remains the same? What happens if both tokens increase in value? (Can't find the answer anywhere)

[@jadeemme3697]

Hey, would you be able to explain how APRs are calculated/executed for LP providers? Some of those APRs listed are insanely highly, like 1000% APR. Is that too good to be true, and how do the LPers accrue this APR? Through tokens? Through the coins they put into the LP?

[@siralexbateman]

Yeah, do you effectively get more if the opposite happened? The coin value goes down. Do you get the coins back plus more $?

[@AlexTrout79]

I’ve been affected by both impermanent and permanent loss

[@fatjohn1408]

I could listen to you saying 'arbitrageur' all day.

[@rafaelfarcher6955]

My new notification sound.

[@bloodthyrsty]

@@rafaelfarcher6955 :D :D

[@trapOrdoom]

On my life!

[@randomvids9388]

Lol

[@atletiekcoach2552]

😂

[@scottPL77]

I've already gone through two videos on your channels and both explained to me difficult concepts which I failed before to understand by reading about them. Thanks for that. Really good ratio of knowledge shared vs. video length :)

[@gwho]

This didn't explain jack.

[@BillBlackfund4u]

@@gwho Made sense to me...

[@crvne]

o0o I love that! knowledge:vid Length is a new key metric imo.

[@cryptomadness7271]

@@gwho go back to one of his beginner videos.

[@Hopeyoumakeit]

your channel is a gem

[@Finematics]

thanks! 🙌

[@theprez77]

Its great that Count Von Count is teaching Defi to the kids.. Great vids, thank you kindly for making, but sorry had to do it.

[@geekkstuff6674]

Finally understood permanent loss. Better than most videos on the topic. Loves the examples on how much you can lose.

[@elhexidente]

Cant believe i didn't find this channel earlier! Thank you!

[@Finematics]

I'm glad you found it now :)

[@youtubeismyjockey7581]

Well explained, the calculation example really helps!

[@JustMe-dw9rl]

Wow I’ve just found these videos. You explain everything in a succinct way with all the pertinent information. Thank you! It should help a lot of people.

[@Finematics]

thanks!

[@itsnothat]

Thank you. Fantastic video. Arbitrageur part was explained in simple terms which was helpful putting together the whole concept.

[@beny.5736]

I guess the key lesson is that if you are providing liquidity, do so in assets that are expected to maintain their relative value over the long term if you don't want to suffer from impermanent loss.

[@gnarxy]

but you're missing the point of the LP tokens. Say you are doing a SOME TOKEN/DAI pair.. and providing the liquidity. DAI is a stable coin.. so even if SOME TOKEN goes up 500% in value, which would give you impermanent loss of about 25% of SOME TOKEN. But you also received the LP token for that pull and are farming more of SOME TOKEN at a 2000% APY, the additional SOME TOKENS you are earning and able to harvest, far outweigh the impermanent loss.

[@mr.november1857]

How do you know that they’re going to maintain their relative value? You don’t. Especially if it’s two assets you’re providing - making it that much challenging. The incentives I believe and the lack of fear can help - just don’t know anyone knows if anyone knows anything tbh

[@parrishdominguez3495]

@@gnarxy If you see this comment can you look at my question I posted up top :), I think you just answered my question. Is it fair to say if the APY is higher than the Impermanent Loss, and assuming the Assets didnt drop to 0. Profits will be made?

[@Showmetheevidence-]

True, except crypto is - by it's nature - so volatile that it's almost impossible to predict. Stable coins might be the only ones that have any level of stability. Pesonally I think for smaller investors you're actually better off just staking coins.

[@Showmetheevidence-]

@@mr.november1857 They're mostly making it up! No-one can accurately predict the ratios of coin values...

[@Bashar3A]

Great video. I'm holding on to some volatile assets I'm expecting to raise in price in near future, and thus reluctant to putting it in pools.

[@Gibonsli]

Thank you for the professionalism!

[@jeromio21]

Thanks man , you are making Defi really accessible for everybody :)

[@Finematics]

Great to hear! Thanks :)

[@aaronfreeman4144]

This channel is awesome. I'm grateful for your expertise and time.

[@Finematics]

Thanks! Great to hear :)

[@internationalgolfconstruction]

Best vid on impermanent loss.

[@Finematics]

thanks!

[@mattdhorstman]

Clear, concise, well-illustrated example. Well done.

[@Finematics]

thanks! :)

[@nonamedlish]

Thank youman, I finally understand. Trying to learn this by reading about it was a nightmare

[@jeremyhazel9074]

Man.....subscribed...you killed it....love the way you explained the concepts

[@alainlavallee3448]

Finally a clear explanation , great

[@soundisfunction]

This channel is truly phenomenal

[@marcelchuo]

Best explainer video on DeFi out there. Thanks man

[@Finematics]

Thanks!!

[@coreed3323]

This was extremely well explained. The best presentation I have seen on impermanent loss. It finally makes sense. Thank you. 👍

[@giordanogiordani81]

Hi, Finematics Team. How are you doing? Guys please, allow automatic subtitles in your videos. Maybe it will help a lot of others people, subscribers of your channel and me as well. As a no-english speacker even though been fluent in english, subtitles always help...thanks and congrats for your excellent work here. Cheers

[@Finematics]

thanks, started adding it for the new videos

[@ALPHAGENXCORP]

LP Impermanent Loss in a nutshell, as I think i got it: Both go up - small loss ? One goes up - medium loss ? One goes down - high loss ? Both go down - highest loss ? Both return where they were - no loss ?

[@JohnAlanWoods]

Great video - I send this to anyone that needs to understand IL.

[@MrGrannyStylez]

thanks for explaining that concept in 10minutes! I like the visuals. keep up the good work :)

[@PrisonerZ3RO]

Best explanation EVER !!!!

[@arnaud4950]

Hello Finematic , at 3:57 you write 524.83 ETH/DAI insteed of 524.83 DAI/ETH. Really nice video, thanks for all your work.

[@ALPHAGENXCORP]

good video - On average How long do you hold positions - a week, two weeks...?

[@Molecularjewelry]

still the clearest explaination I can find - visuals help thanks

[@theflipside2709]

Clear, succinct explanation!

[@GreenfieldPortfolioResearch]

i'm amazed by the quality of the content. congratulations, yet again.

[@TheRollupCo]

Your channel is amazing, very interesting DeFi video

[@tyvaughnholness1985]

This was fantastic, thank you! I appreciated the detail on the examples as well.

[@Finematics]

Glad it was helpful!

[@tobiprivat8878]

great! totally underrated content!!

[@Sonnyrei]

Great video, thanks! How did you get 19.07 on 3:31 and 0.93 on 3:36?

[@andina116]

I have gained a lot from defi mining, and I like this project.

[@0x0x0xWIP]

arb makes sense, but what happens when the market crashes? Do you just collect fees and hodl in the LP until price is back up?

[@egregius9314]

If both of your tokens crashed equally, you can either HODL your LP tokens until the prices are back up, or take them out. But you might as well park them until they get back up, unless you expect them to get back up unequally. Basically, you want to take them out when the ratios have returned to what you started with, unless the fees have been *really* good to you.

[@mattschroeder1100]

It really boils down to if you believe the tokens will increase in value in the future. Let's put staking aside: If you wouldn't keep your money in an asset, it's probably a good idea to cut your losses and move forward somewhere else

[@GabrielRubens]

Great explanation, this channel is a hidden gem

[@blackalert3383]

Thanks for another great video. Would love to see another video on impermanent loss when it’s a non-stablecoin so two volatile cryptos. And any tips on managing that

[@branislav3800]

Does this 3:00 mean that Uniswap will not change the price of the tokens if no one is making the trades with the pool? So as soon as someone makes a trade Uniswap will only then recalculate LP tokens?

[@Jesussaft]

Great video! I am currently investing in a token which I expect to blow up soon (x10 and above). I thought I am smart by providing liquidity because I would gain fees on all the buys coming in but now it looks like there will be serious impermanent loss. Time to get out of the liquidity pool :D

[@limeroundup]

Incredible. Best explanation ever!

[@Finematics]

thanks!

[@nada347_]

Liked and subscribed. Thank you for explaining these so effectively.

[@agentlier6974]

You know your stuff really well man. Great in information 👍👍👍👍

[@Finematics]

Thanks!

[@temitopeagoro4603]

Could you possibly delve into Decentralized autonomous organizations? I love your content and explanations. I am really learning a lot! Thank you!!

[@Finematics]

Sure, there is a plan to make a video about DAOs soon! Stay tuned :)

[@steveshuffle]

mate this is amazing. All of your content

[@Finematics]

thanks!

[@steveshuffle]

@@Finematics thank YOU

[@timschierenbeck2758]

Thanks so much again! You are like the teacher i wished for in shool :-)

[@Finematics]

thanks! :)

[@tryxlr8m8]

Thank you, excellent explanation!

[@Finematics]

Glad it was helpful!

[@gutzz12]

very informative always buddy thanks

[@GabrielEnema]

Great info, your explanations are super easy to assimilate☺☺☺

[@jesseallan9006]

Excellent explanation. Thank you!

[@KylanHurt]

Very high quality video. Thanks you for making!

[@sergei.wallace]

Love these explainers!

[@Finematics]

thank you!

[@Zegik_Niet]

the intro to this video fits me perfectly. I did indeed not do any research before hand, only after hand YOLO

[@Zegik_Niet]

btw i nominate these video's to be the most clear explenation i ever got anywhere. very well done

[@viurnne]

great lengthy detail explanations

[@martinpepper630]

Such a great channel! - Thanks you

[@Finematics]

thanks!!

[@davidhefer118]

Wow.. best explanation

[@Finematics]

thanks!

[@gordongekko9742]

Great explanation! Thank you very much

[@Finematics]

You are welcome!

[@stevenxalchemy5906]

Another awesome video. Well explained on impermanent loss. Keep up the fab work!!!!

[@Finematics]

Thanks Steven! :)

[@gmanova]

what a fantastic explanation. thank you.

[@ic3b3rgi23]

Great Video man, like always 💯

[@Finematics]

Thanks!

[@lucsu1428]

Wow, thanks for the explanation and the cool graphic!

[@HippiePajon]

Thank you!! I finally understand this topic

[@-.TS.-]

Definitely needed this!

[@hugoamorim5301]

Yes this is bad in current situation that we are huge bull market but in last 3 years was good. Nice video

[@seraaron]

So to avoid impermanent loss, is it only advisable to be a LP when the markets are relatively stable? Presumably when there's high volume and high volatility, there's more to be gained by being a LP, but also more potential for losses?

[@sebrady951]

If you have a pair of volatile coins that are strongly correlated to eachother, impermanent loss would be mitigated

[@raylay2197]

@@sebrady951 do you mean inversely co-related?

[@sebrady951]

@@raylay2197 No I don't... That would maximize impermanent loss.

[@samdeb6506]

@@sebrady951 Ah ofcourse, because if two coins move in the same direction (volatile) the impermanent loss would be minimal (or less)

[@sebrady951]

@@samdeb6506 exactly dude , it's all about the relative value between the two coins.

[@omidsarayanibafghi222]

Awesome videos! You have a talent to comprehend and explain hard to grasp concepts in a brief yet comprehensive format.

[@Finematics]

thanks!

[@otismurrayiii1672]

Absolutely great video.

[@Finematics]

thanks!

[@bespokespace2809]

fantastic video, thank you

[@Finematics]

thanks!

[@elleobi]

This was really helpful. Thank you!

[@oveyshd]

Great videos, great illustration! Very educative. Thank you

[@Finematics]

Thanks! Glad they are helpful :)

[@kenmeyer100]

Very valuable explanation! I have been wading through tons of materials where the authors themselves did no seem to understand the underlying concepts and just spit out some gibberish

[@DG-mo1zf]

Very informative video, thank you!

[@garg738]

VERY WELL EXPLIANED

[@Finematics]

thanks!

[@bonzo1928]

Very clear, thanks!

[@justdoitFR]

Thank you so much for this great content. I am still trying to find out what could be risks for providing liquidity for a pair like USDT vs USDC... Of course excluding any smart contract bug or any hacks because those risks are just inherent to everything in crypto.

[@Finematics]

The main risk is that one of the stable coins can lose its peg to the US dollar. USDT, for example, is not completely transparent, so we don't exactly know if they have all the assets to cover their outstanding USDT balance.

[@kenmeyer100]

@@Finematics yeah, it's like you want to cash out your chips and the casino operator say 'sorry, we have no more dollars for you'

[@postmanwithsnow]

There are none. Only risk is a bank run which won't occur until something really bad happens. But then all your other crypto will most likely be worth nothing anymore either 😉

[@katyaolivan6085]

Because of your vids, I understand everything better😃 thanks

[@Finematics]

Glad to hear that! :)

[@themfu]

Great videos on your channel.

[@raoulml1]

Thanks for the great content.

[@gurpreetsaini7644]

One can use Solver in excel to find out the revised amount of ETH and DAI shown at 3:30.

[@Mike-cr1nc]

Thank you for this my friend, will recommend you !

[@Finematics]

Thank you too!

[@NHill-dg8ch]

You just won a new subscriber

[@Finematics]

thanks!

[@trevorryder9732]

Could you do a video on non-fungible tokens and their use so far and future use.

[@jochembraad1760]

Very well explained

[@StinusHjensbo]

@6:23 you say if the asset goes up by 500%, you lose 25%. Am I correct in concluding that it's the ratio between them that should go up by 500% for that loss to occur ? Say both assets in the pool goes up by 500%, your loss would be 0% right ? Also, with the same logic, you also lose 25% if one asset dropped by 80% in relationship with the other.

[@frmcf]

As he says in the video, it's the price wrt the other asset(s) in the pool that counts. In a 2-asset pool, they can't both go up relative to each other!

[@mcJayX]

AMAZING video. Thanks for posting.

[@scivanpoon]

Can you pls explain how interest rate is calculated automatically on a defi lending/borrowing pool? Thanks!!!

[@Finematics]

Great suggestion! Explaining how lending protocols work in DeFi is on the list of topics for future videos :)

[@sebastienjurkowski]

Do you mean how the EPY is calculated or how the interest is automatically applied? The second is tied to the smart contract, to simplify, all the rules of 'interest' automation are programmed and propagated in the ETH blockchain. Hope that helps

[@richardscott724]

Wow! Awesome explanation….keep up the good work…

[@sepman1]

You are amazing - 'Nuff said!

[@ZzwhiskeybkszZ]

this video is gold

[@Finematics]

thanks!

[@MAN221184]

One quick question at 3:31 how did you arrive at increased value of 10,488.09 Dai from 10,000 Dai?

[@OneTwoMark]

This is my first run of the video so im still hazy, will rewatch. But if you miss out on profits of a token going up in price, does that mean youre also safe from the losses of the token price going down?

[@LiteLiger]

Very solid and analytical video. So in technicalities it would be lot safer to invest in stablecoin pairings right? Due to the nature of prices fluctuating lot less.

[@Zharadeen]

I love your page so much

[@rezaxxx]

Great video, thank you.

[@445142]

@finematics how are this videos done? how many hours do you put in this videos? i like the style alot.

[@ericniyongira4467]

This channel is really awesome. I am new to Yield Farming - Providing Liquidity, and I hope to learn more from you! Anyone who can recommend me the best way to start?

[@heliotrope_1]

Your videos are great.

[@Finematics]

Thanks!