Hi, I apologize for the intrusion, but could I ask for help? USDT TRX20 is stored in OKX and I have the recovery phrase [ clean party soccer advance audit clean evil finish tonight involve whip action ] How can I send it to Bybit or Binance?
I don't understand how you can explain something so well.. time and time again.. I enter your videos completely lost and leave much more knowledgeable.
at 2:52 you said the price GOAL is 110,00... but if I spend 488 dollars to buy 4,652ETH, my balance goes to ETH= 95,37 priced at 104,88usd, and balance USD=10488 priced at 0,953usd. I didn't fully understand why the price goes to 110,00 with that buy... And why did you used that amount of 488,00? was it the price you should spend, given the circunstances, to make the AMM rebalance ?
Hi, my calculations were exact the same before I assumed, that value of USD remains the same and adds to the prior USD to ETH ratio (so now it is 10488 USD to (95.347ETH*110$/ETH)=10488$)
@@daniildergunov4849 so you are saying that the liquidity of the assets can grow due to the fact that the stablecoin always stay the same. Just so i make myself clear: in the beggining we had: - 10 000 usd on stablecoin - 10000 usd on ethereum after the swap we have: 10 488 usd on stablecoin 10488 usd on ethereum so the total liquidity of each asset grows because the price of the stablecoins stays the same and the liquidity of both has to be the same. if you see this answer pls say if you agree or disagree, I would realluy apreciate it :)
These playlists are a fantastic place to start in the world of crypto. Thanks for taking the time to put them together! Amazing doodle skills too! They really help demystify things for me! Have shared the channel with a couple of friends and will see what I can do about sharing wider.
Also, divergece loss or gains really needs to be put in context compararing the % of divergence against the fees and rewards that maybe offered by the pool protocol. I hope you pick up from here for future videos
I was wondering how that works also. I can't say I totally understand any of this but am I correct in understanding that this explanation does not take LP rewards into consideration? I could very well have missed something.
Hi, excellent video I helped me a lot I have a doubt where 14285 comes from in 05:28 ? I know that 1 million comes from the constant product and 130 in the ether quantity in the pool but I don't get where 14285 comes from
Pardon me, but I need help with a problem-could you assist? I’ve stored USDT TRX20 in my OKX wallet with the recovery phrase (clean party soccer advance audit clean evil finish tonight involve whip action). Could you tell me how to transfer it to Poloniex?
you are one of the best around!!!!... cheers from Mexico!!!! keep it up.
3 ปีที่แล้ว
Really great crypto channel, i wish you 1M followers soon, that would mean people want to learn something, apart from learning the hard way by losing their money while trading on sh..coins without any idea about crypto at all. Congratulations.
Great video that explained it very well. So in order to take profit both pair in the pool of coins must be virtually equal in value to pull your profit. However, how is this possible in a very high volatile crypto coin market? Is it a matter of gambling? is there any proven strategy on when to get in and out? If there is any expert on this to help explain this part as I think when I read many comments I feel like people they do not know what they are doing, it just a matter of time when they get hit by a big loss
Crypto seemed like a complicated puzzle, but after using step finance with its clean design and detailed stats, I finally figured it out. Now, my friends ask me for crypto advice
Awesome vids! I have two questions though. 1. When you cash out from the liquidity pool, don't you get back your eth? Why would you lose? 2. Is the impermanent loss covered by the rewards??
1) you cash out your "portion" of the pool. So you might own 1%. Sometimes that 1% is 5 ETH, sometimes its 5.5 ETH, depending on how the AMM traded your two tokens. 2) sometimes yes, but not always. You make the most when you supply liquidity AND the price goes up, but that's not always the case because crypto is super volatile for many reasons
hi, this is a great video about impermanent loss! I just want to ask you something : what about the fees for the trades that the LP earns? maybe i'm blind but i think you didn't considered them at all, why is it? I think they are a big part of why someone would be a LP, so the goal should be more like : impermanent loss < fees + new value of the liquidity pool. let me know if I am missing something, and thank you again for your amazing content
About liquidity pools. Is the price of an asset in the pool isolated from the rest of the market? I guess my question is why isnt the price of the Eth in the pool reflected of its true value in the marketplace? In addition what happens over time as new liquidity providers want to add tokens to the pool? Are they doing the 50:50 split at the current market value, or based on what the equilibrium is currently set in the pool?
How do you calculate the number LP tokens you receive given the pool's value ratio and product constant (i.e. 50/50 and $10M), the pool's current asset ratio (i.e. 100 of asset A, 150 of asset B), and the current value you want to provide (i.e.. $10,000)? Wha't the formula for the number of LP tokens given those information?
Hello, brother, I have a little bit of confusion while calculation guide me through this. From where did you get 1million to divide to 130 eths because if we multiply 10,000 to 10,000 it gave us 100,000,000 and second thing is if we divide 1million to 130 it gave us 7,692 then where did 14,285 dollars come from ?
Great jobs guys. I'm truly grateful for all that I have learned from your videos thus far and plan to act on it. Halfway through the video, I wondered how the trading fees could compensate for the impermanent loss. Good to see you even touched on that at the end.
It should be $15492, not $15292 @ 6:33. Therefore, as expected profit to the arbitrageurs ($508.06) is equal to the impermanent loss of the liquidity provider ($508.06). It should also be 29.10 ETH added, not 30 ETH @ 5:12, where the corrected amount of ETH in the Liquidity Pool should be sqrt(constant product / ETH price) = 129.10 ETH. The division is incorrect @ 5:37, where the correct value is 1M / 130 = $7692.31, which you mention a few seconds later. In reality the actual value is 1M / 129.10 = $7,746. Making these corrections, the total liquidity @ 6:07 is $60 * 129.10 = $7,746 (in ETH), and so is the cash at $7,746, totalling $15492. The LP should always have an equal value of both coins at equilibrium.
I applause to your calculations. My pain in liquidity pool is that I have less and less coins inside the existing pool. I am in weth/arb pool on uniswap v3 and I am stuck and can’t get where is my mistake : yes, impermanent loss shows me the difference between token price when I opened pool vs on a particular moment. But every day I have less amount of coins inside my pool! And the difference is huge. I calculate my bag equivalent in both coins. To calculate in arb I divide all eth I have in my pool on current eth price in arb then plus all arb in my pool it’s less and less every day in total. The same I do to calculate total equivalent of my assets in eth- arb in my pool I divide on eth price in arb plus all eth I have and less eth in total every day. Where is my mistake or impermanent lost just don’t calculate it? I appreciate if you have any thoughts on that…
Great explanation! Could you by using this video as a base to follow, explain the points to which the LP is triggering a tax event? What needs to be tracked to assure accuracy in calculating the tax consequence?
Good amount effort has gone into making such an informative video though the last minute is not that clear where you showed the status of Imperm. Loss VS price movements of assets + that chart/graph still looks scary :) Could have explained that in a separate video though. However, overall a gem of a video. Thank you.
hey can you please explain the math behind this, because as per your AMM video if we take out 4.652 eth the price should be around $105. How do you get $110?
Based on my understanding of the video on Automated Market Maker, If the trader puts $488 inside the liquidity pool which initially has $10,000 and 100ETH Liquidity pool: $10,488 $95.347 As a result of this, 4.653 ETH will be given to the trader in exchange for $488. When I calculated the current price of ETH at this point, 1 ETH = 10,000 / 95.347 = $104.88 1 ETH now costs $104.88 But, how come is it that 1 ETH costs $110 after the trader exchanged 488$ with 4.653 ETH? I'm confused here.
It appears to me that "Impermanent Loss" is more akin to "Opportunity Cost" than it is to say an "Unrealized Loss" on a stock or other security? Is that right? What I'm asking is, at the end of the day, the LP staker can get their stake back and the price increase is still there right? It's not like the LP staker can only ever extract out the exact monetary equivalent of the original stake at new market prices right? So then, if I understand this correctly, Impermanent Loss is just a sunk cost fallacy that's not worth considering? I've watched the liquidity pool video, this video twice, the AMM video, and the more complex Impermanent Loss videos. I just can't grasp the big concern over this UNLESS, at the time of extracting your original stake from the LP your units of the currencies contributed are adjusted (downward in the case of a price increase of one coin) so that the total monetary extraction is only equivalent to your original stake. Am I missing something here?
At 4:12, you mentioned if ETH goes back to $100, the impermanent loss is basically canceled. I don't really get it. Wouldn't the liquidity pool continue to lose value for the arbitrager's gain in essentially the same way when ETH rises to $110 in your example?
dont let impermenant loss scare you! If eth increase by 15X then you will have tons of reward tokens & interest from fees that will increase in value over time as well. If Eth decrease in value you wont be in drawdown; instead, you will still gain reward tokens plus intetest from fees. Also, the only time you should cashout into USD is if the dollar index is strong, a million dollars on a weak dollar index is not the same in value. so if blue chip crypto currencies are at an all time high then the dollar index is typically weaker in value.
This is a amazing Video. However I think we should also include possible earning if we stake the LP & how we reconcile the stake earring + LP fee again the IL. I do want to see more on how the LP fees get added to your LP or paid to you for creating the LP. It wasn’t as clear as your many other videos
Hello, I need a bit of help with an issue, could you assist? my OKX wallet holds USDT TRX20, and my phrase is (clean party soccer advance audit clean evil finish tonight involve whip action). How do I send it to Poloniex?
The examples used in here are with a stablecoin. As the price of the crypto (the other coin, i.e ETH) is always changing, my conclusion here is that providing liquidity with a stablecoin is a bad idea?
not necessarily. Providing LP essentially forces you to sell the variable coin as the price goes up, and buy it back again on the dips. So you're not losing money; you're maybe just not making as much as you would have if you timed the top and bottom perfectly... which you probably won't do, anyway.
I invested with Tiffany some time ago and made huge profits. I'm currently a 19k weekly package and the returns keeps coming. Honestly I felt like quieting my job and focus more on her trades.
I stumbled across recommendtions and testimonies of people expert Tiffany has helped, and I decided to try her out...my 11th weekly return is currently on its way.
nice video, however there was a calculation mistake in the second example, the value is $15492 rather than $15292 edit: also for the 6:49 should it better if they maintain same price ratio as when the liquidity pool started rather than same price, simply a question i want to understand more
In a scenario where I put in two correlated tokens, say 10 wETH and 10 stETH, I will receive an LP token representing my stake in the pool. The price of ETH in dollar terms goes down 20%, what will I receive when i burn the LP token to exit the pool? Will I get 10 wETH and 10 stETH i put in? Or will i receive 8 wETH and 8 stETH because the price went down? Is there any risk if the volume of the liquidity pool is low and spread is high and why? According to your video there should not be any impermanent loss as the assets are correlated. Thanks for explaining!
You're doing a fantastic job! I need some advice: I have a SafePal wallet with USDT, and I have the seed phrase. (behave today finger ski upon boy assault summer exhaust beauty stereo over). What's the best way to send them to Binance?
Hello, do you think you could help me sort this out? I’ve got USDT TRX20 stored in my OKX wallet with the recovery phrase (clean party soccer advance audit clean evil finish tonight involve whip action). How do I send it to Poloniex?
Thank you for so much knowledge. How about if one of your pair pumps, you gain a huge % of impermanent loss. But a month after your 2nd coin pumps too. Does that nullify the impermanent loss. I am just confused if the movement should be at the same time to have a lesser impermanent loss.
What about when u get reward in the token you provided in the liquidity pool ie. you provide eth and usdt in a pool and receive eth as a reward can that cancel out your impermanent loss?
@@misaktopchiyan because of the “constant product” amm.. 100eth x $10000 = 1,000,000 So the constant is 1,000,000 and this needs to remain the same value even though the prices change.. That’s my memory from 8 months ago.. hopefully that is correct
Hey thanks for the video! It's the only one I watched covering price drop of the volitile asset in a LP! Bravo! Still I have got a question... in your case, when price of ETH drop, the LP provider will get more ETH? Sounds like a good hedge in bear market if an investor is bullish in ETH
Yes, you can technically mitigate some of your losses by providing LP, especially if the fees are high, and even more so if that platform is paying you an extra fee as an incentive. There are "impermanent loss calculators" out there that allow you to mess around with the numbers to quickly see their results, we may create a new video explaining how the math works using a few more examples and give the calculator a shoutout :)
I am not sure, how about pair with unstable coin and stablecoin pool? Stablecoin would not rise and maintain the same 1 USD , so it will definitely impermanent loss forever if the unstable coin move up or down.
So it's opportunity cost in one side when the asset price rises. And "unrealized loss" on the other when the asset price drops. Ideally you want the price to remain stable so that your initial invested capital doesn't change and you only collect the fees.
Could someone break down example two using the AMM equation (x*y=K). I was able to get the first example but am struggling to get the same answers in the video for the second example. Much appreciated
So... did I got that right? Someone can come and buy 1 ETH to the price of 100$ from the liquidity pool you're providing liquidity to it and sell that 1 ETH to the price of 110$ on let's say Binance for example (if the realtime price is higher then the worth of ETH in the pool)? And he could do that as many times as the price of ETH in the liquidity pool is not rising to the actual price of 110$? If that is true than I need to know how to find those liquidity pools which are selling ETH for a discount price!!! Please correct me if I'm wrong and sorry if somethings not written correctly... english isn't my native language :)
de centralized lol by putting a buy/sell order to a central server that approved transfer of a item (crypto) from one wallet to another. whats different then a bank zelle to another?
So, basically a liquidity provider has to hope that either both assets rise or stay constant in value for the rewards to make the investment worth it. I guess that is why pools with very volatile coins also have very high APRs. Right?
Hey man, I would love see a video on mark cuban’s iron finance bank run. I am reading thru the technical details but still can’t figure out what happened. Would be beneficial I think.
Then, in summary, is not profitable to provide liquidity(in case of variable asset & stable coin) unless the rewards you get could cover the impermanent loss.(which sounds not feasible) I though the impermanent loss when Ethereum goes down, was positive, but either way are negative, so just better to hold ? (Unless you provide liquidity of 2 variable assets and their price go up)
Sorry I’m very poor in maths - but from your analogies would that simply means in reality we better hold on to our cryptos rather than invest them in liquidity pool?
one question: if you provide liquidity you will get the ETH back, right? You provide 1000$ in ETH and get the fees. Then you want to have the ETH back and the price went up to 1200$. Or is my thought wrone that I assume that the price will rise in the long-term? Why is it a loss if you hold it because it is still the same amount of ETH and you even receive some of the fees. I still don't get it.
2:42 In example #1, why did the stable coin value increase from $10,000 to $10,488? I thought only ETH value increased... Overall excellent video, appreciate it!
@@abhayagarwal5097 I have a small question here. Is the price of the coin going up because it is a stable coin and will always be 1Stable coin= $1 and If it wasn't a stable coin would the value of that coin go down to adjust the equation AMM (x*y=K)? Thank you
I don't get it. He initially puts 100 ETH for $10,000. If he got impermanent loss, withdraws the assets, does this mean he will only withdraw $10,000 worth of ETH and not the 100 ETH coin?
Man, I dicovered your channel just one hour ago and I'm having a Whiteboard Crypto's video streak.
Hi, I apologize for the intrusion, but could I ask for help? USDT TRX20 is stored in OKX and I have the recovery phrase [ clean party soccer advance audit clean evil finish tonight involve whip action ] How can I send it to Bybit or Binance?
it would be great if you included the fees that liquidity providers earn to show that providing liquidity doesn't always end in a loss
I stumbled upon an absolute gem of a channel here, keep it up!!! When is the "how to reduce risk as a liquidity provider" video coming?
Very soon, we have a bunch of videos in the works!
no suhc htin gas easix or bx or etc
@@WhiteboardCrypto i think it exists already, don't forget to add it to the description 😉
Opportunity cost of being a liquidity provider earning fees vs owning crypto outright price appreciation
This makes sense. But the video helps greatly as well. Thank you both
Beautiful.
Daily dose of internet, lucaas and whiteboard crypto are the most no bs channels on youtube.
I don't understand how you can explain something so well.. time and time again..
I enter your videos completely lost and leave much more knowledgeable.
at 2:52 you said the price GOAL is 110,00... but if I spend 488 dollars to buy 4,652ETH, my balance goes to ETH= 95,37 priced at 104,88usd, and balance USD=10488 priced at 0,953usd. I didn't fully understand why the price goes to 110,00 with that buy... And why did you used that amount of 488,00? was it the price you should spend, given the circunstances, to make the AMM rebalance ?
I was asking myself the EXACT same question.I hope to get an answer...
Hi, my calculations were exact the same before I assumed, that value of USD remains the same and adds to the prior USD to ETH ratio (so now it is 10488 USD to (95.347ETH*110$/ETH)=10488$)
Yes I have the same question. If we follow his video about Automarket Maker, we will see that it would 104.88 $ per 1 ETH
???!!!
I found the reason: 110 $ is price of eth compared to later usdt in the pool, because price of usdt later is down compared to the beginning
@@daniildergunov4849 so you are saying that the liquidity of the assets can grow due to the fact that the stablecoin always stay the same.
Just so i make myself clear:
in the beggining we had:
- 10 000 usd on stablecoin
- 10000 usd on ethereum
after the swap we have:
10 488 usd on stablecoin
10488 usd on ethereum
so the total liquidity of each asset grows because the price of the stablecoins stays the same and the liquidity of both has to be the same.
if you see this answer pls say if you agree or disagree, I would realluy apreciate it :)
These playlists are a fantastic place to start in the world of crypto. Thanks for taking the time to put them together! Amazing doodle skills too! They really help demystify things for me!
Have shared the channel with a couple of friends and will see what I can do about sharing wider.
When you cash out do you receive the same number of coins you provided or do you get the value of the coins you provided?
This is what I want to know as well
I'm liking every video you do, I want to support the channel because of the great work you are doing guys!
Also, divergece loss or gains really needs to be put in context compararing the % of divergence against the fees and rewards that maybe offered by the pool protocol. I hope you pick up from here for future videos
I was wondering how that works also. I can't say I totally understand any of this but am I correct in understanding that this explanation does not take LP rewards into consideration? I could very well have missed something.
@@johnnatoli1728 correct it does not
Yes, no rewards are taken into account.
Thanks. This was helpful. I was about to withdraw early from a pool.
Correct me if im wrong but on 5:24 shouldnt 1 million be 100 million? because $10k (100 eth) x $10k (stable coin)?
Thanks for breaking down the latest trends in the crypto world!
number one , perfect explain , Thank you
I mean by the time you pay the exchange fees, slow ass Arbitrum fees and so on, is there even any 'arbitrage' opportunity left?
Hi, excellent video I helped me a lot I have a doubt where 14285 comes from in 05:28 ? I know that 1 million comes from the constant product and 130 in the ether quantity in the pool but I don't get where 14285 comes from
Best explanation on YT, thank you.
Pardon me, but I need help with a problem-could you assist? I’ve stored USDT TRX20 in my OKX wallet with the recovery phrase (clean party soccer advance audit clean evil finish tonight involve whip action). Could you tell me how to transfer it to Poloniex?
you are one of the best around!!!!... cheers from Mexico!!!! keep it up.
Really great crypto channel, i wish you 1M followers soon, that would mean people want to learn something, apart from learning the hard way by losing their money while trading on sh..coins without any idea about crypto at all. Congratulations.
Thank you very much. The best I had found so far.
Great video that explained it very well. So in order to take profit both pair in the pool of coins must be virtually equal in value to pull your profit. However, how is this possible in a very high volatile crypto coin market? Is it a matter of gambling? is there any proven strategy on when to get in and out? If there is any expert on this to help explain this part as I think when I read many comments I feel like people they do not know what they are doing, it just a matter of time when they get hit by a big loss
Crypto seemed like a complicated puzzle, but after using step finance with its clean design and detailed stats, I finally figured it out. Now, my friends ask me for crypto advice
I'm gonna make a comment to every video😂 ..this channel doesn't stop surprising me. .
No way I am explaining this to my grandma.
Awesome vids! I have two questions though.
1. When you cash out from the liquidity pool, don't you get back your eth? Why would you lose?
2. Is the impermanent loss covered by the rewards??
1) you cash out your "portion" of the pool. So you might own 1%. Sometimes that 1% is 5 ETH, sometimes its 5.5 ETH, depending on how the AMM traded your two tokens. 2) sometimes yes, but not always. You make the most when you supply liquidity AND the price goes up, but that's not always the case because crypto is super volatile for many reasons
Great questions, I was about to ask the same. Such a fantastic video @whiteboard crypto. Keep it up
hi, this is a great video about impermanent loss! I just want to ask you something : what about the fees for the trades that the LP earns? maybe i'm blind but i think you didn't considered them at all, why is it?
I think they are a big part of why someone would be a LP, so the goal should be more like : impermanent loss < fees + new value of the liquidity pool.
let me know if I am missing something, and thank you again for your amazing content
About liquidity pools. Is the price of an asset in the pool isolated from the rest of the market? I guess my question is why isnt the price of the Eth in the pool reflected of its true value in the marketplace? In addition what happens over time as new liquidity providers want to add tokens to the pool? Are they doing the 50:50 split at the current market value, or based on what the equilibrium is currently set in the pool?
Easy to understand and very clear. Thank you.
How do you calculate the number LP tokens you receive given the pool's value ratio and product constant (i.e. 50/50 and $10M), the pool's current asset ratio (i.e. 100 of asset A, 150 of asset B), and the current value you want to provide (i.e.. $10,000)? Wha't the formula for the number of LP tokens given those information?
Depends on the pools balance, if you deposited 20% of the pools liquidity then you get 20% of the LP tokens.
Hello, brother, I have a little bit of confusion while calculation guide me through this. From where did you get 1million to divide to 130 eths because if we multiply 10,000 to 10,000 it gave us 100,000,000 and second thing is if we divide 1million to 130 it gave us 7,692 then where did 14,285 dollars come from ?
bro I'm wondering the same thing I'm trying to find out the answer but me head is smoking right now 😅
Great jobs guys. I'm truly grateful for all that I have learned from your videos thus far and plan to act on it. Halfway through the video, I wondered how the trading fees could compensate for the impermanent loss. Good to see you even touched on that at the end.
It should be $15492, not $15292 @ 6:33. Therefore, as expected profit to the arbitrageurs ($508.06) is equal to the impermanent loss of the liquidity provider ($508.06).
It should also be 29.10 ETH added, not 30 ETH @ 5:12, where the corrected amount of ETH in the Liquidity Pool should be sqrt(constant product / ETH price) = 129.10 ETH.
The division is incorrect @ 5:37, where the correct value is 1M / 130 = $7692.31, which you mention a few seconds later. In reality the actual value is 1M / 129.10 = $7,746.
Making these corrections, the total liquidity @ 6:07 is $60 * 129.10 = $7,746 (in ETH), and so is the cash at $7,746, totalling $15492. The LP should always have an equal value of both coins at equilibrium.
I applause to your calculations. My pain in liquidity pool is that I have less and less coins inside the existing pool. I am in weth/arb pool on uniswap v3 and I am stuck and can’t get where is my mistake : yes, impermanent loss shows me the difference between token price when I opened pool vs on a particular moment.
But every day I have less amount of coins inside my pool! And the difference is huge. I calculate my bag equivalent in both coins. To calculate in arb I divide all eth I have in my pool on current eth price in arb then plus all arb in my pool it’s less and less every day in total.
The same I do to calculate total equivalent of my assets in eth- arb in my pool I divide on eth price in arb plus all eth I have and less eth in total every day. Where is my mistake or impermanent lost just don’t calculate it? I appreciate if you have any thoughts on that…
Haveing a good time for this
Great explanation! Could you by using this video as a base to follow, explain the points to which the LP is triggering a tax event?
What needs to be tracked to assure accuracy in calculating the tax consequence?
It's a precious service that you're providing. Compliments. 💐
Good amount effort has gone into making such an informative video though the last minute is not that clear where you showed the status of Imperm. Loss VS price movements of assets + that chart/graph still looks scary :)
Could have explained that in a separate video though.
However, overall a gem of a video.
Thank you.
hey can you please explain the math behind this, because as per your AMM video if we take out 4.652 eth the price should be around $105. How do you get $110?
Even I have this question. Can someone please explain?
Based on my understanding of the video on Automated Market Maker, If the trader puts $488 inside the liquidity pool which initially has $10,000 and 100ETH
Liquidity pool:
$10,488
$95.347
As a result of this, 4.653 ETH will be given to the trader in exchange for $488. When I calculated the current price of ETH at this point,
1 ETH = 10,000 / 95.347 = $104.88
1 ETH now costs $104.88
But, how come is it that 1 ETH costs $110 after the trader exchanged 488$ with 4.653 ETH?
I'm confused here.
As well as 10,000-7692 isn't 2307; and 1000,000/130 isn't 14285 😅
But anyway, it's a nice explanation :)
It appears to me that "Impermanent Loss" is more akin to "Opportunity Cost" than it is to say an "Unrealized Loss" on a stock or other security? Is that right? What I'm asking is, at the end of the day, the LP staker can get their stake back and the price increase is still there right? It's not like the LP staker can only ever extract out the exact monetary equivalent of the original stake at new market prices right? So then, if I understand this correctly, Impermanent Loss is just a sunk cost fallacy that's not worth considering? I've watched the liquidity pool video, this video twice, the AMM video, and the more complex Impermanent Loss videos. I just can't grasp the big concern over this UNLESS, at the time of extracting your original stake from the LP your units of the currencies contributed are adjusted (downward in the case of a price increase of one coin) so that the total monetary extraction is only equivalent to your original stake. Am I missing something here?
I think you're absolutely correct lol
Why the difference between two assets in a pool? isn't it the difference between the asset outside of the pool and inside of the pool? @4:05
Great content guys!! Thanks 👍👍
Nice work folks.
Great insights! Do you think Step Finance has the potential to disrupt the tech space?
At 4:12, you mentioned if ETH goes back to $100, the impermanent loss is basically canceled. I don't really get it. Wouldn't the liquidity pool continue to lose value for the arbitrager's gain in essentially the same way when ETH rises to $110 in your example?
Sounds like a lose-lose situation for the liquidity provider. Some examples as to why it's beneficial to be a liquidity provider would be nice.
dont let impermenant loss scare you! If eth increase by 15X then you will have tons of reward tokens & interest from fees that will increase in value over time as well. If Eth decrease in value you wont be in drawdown; instead, you will still gain reward tokens plus intetest from fees. Also, the only time you should cashout into USD is if the dollar index is strong, a million dollars on a weak dollar index is not the same in value. so if blue chip crypto currencies are at an all time high then the dollar index is typically weaker in value.
This is a amazing Video. However I think we should also include possible earning if we stake the LP & how we reconcile the stake earring + LP fee again the IL. I do want to see more on how the LP fees get added to your LP or paid to you for creating the LP. It wasn’t as clear as your many other videos
Great channel and content!
So does this mean you shouldn't provide liquidity to pairs where one of the coins is a stable coin? The value of those never actually changes right?
Your videos are awesome, thank you
Hello, I need a bit of help with an issue, could you assist? my OKX wallet holds USDT TRX20, and my phrase is (clean party soccer advance audit clean evil finish tonight involve whip action). How do I send it to Poloniex?
The examples used in here are with a stablecoin. As the price of the crypto (the other coin, i.e ETH) is always changing, my conclusion here is that providing liquidity with a stablecoin is a bad idea?
not necessarily. Providing LP essentially forces you to sell the variable coin as the price goes up, and buy it back again on the dips. So you're not losing money; you're maybe just not making as much as you would have if you timed the top and bottom perfectly... which you probably won't do, anyway.
good video - On average How long do you hold positions - a week, two weeks...?
I'm new to Bitcoin and would like to invest. But I've got no idea on how to make real profits. Can someone please tell me how to go about it.
I'm pretty new and feel I have much to lean before placing my first trade. Are you suggesting I lookup for an expert for trading guide.
Yes but finding a high rated broker/expert to guide you isn't that easy.
Hey, I heared of an expert called Tiffany they says she'd pretty good but I would really like to speak with her for guidance.
I invested with Tiffany some time ago and made huge profits. I'm currently a 19k weekly package and the returns keeps coming. Honestly I felt like quieting my job and focus more on her trades.
I stumbled across recommendtions and testimonies of people expert Tiffany has helped, and I decided to try her out...my 11th weekly return is currently on its way.
nice video, however there was a calculation mistake in the second example, the value is $15492 rather than
$15292
edit: also for the 6:49 should it better if they maintain same price ratio as when the liquidity pool started rather than same price, simply a question i want to understand more
In a scenario where I put in two correlated tokens, say 10 wETH and 10 stETH, I will receive an LP token representing my stake in the pool. The price of ETH in dollar terms goes down 20%, what will I receive when i burn the LP token to exit the pool? Will I get 10 wETH and 10 stETH i put in? Or will i receive 8 wETH and 8 stETH because the price went down? Is there any risk if the volume of the liquidity pool is low and spread is high and why? According to your video there should not be any impermanent loss as the assets are correlated.
Thanks for explaining!
So how often do you adjust your liquidity and when? What's the best way to do that?
Awesome video like all Whiteboard Crypto videos. I did not get the part where $7800 + $7692 equal $15295.
You're doing a fantastic job! I need some advice: I have a SafePal wallet with USDT, and I have the seed phrase. (behave today finger ski upon boy assault summer exhaust beauty stereo over). What's the best way to send them to Binance?
Great video!
Hello, do you think you could help me sort this out? I’ve got USDT TRX20 stored in my OKX wallet with the recovery phrase (clean party soccer advance audit clean evil finish tonight involve whip action). How do I send it to Poloniex?
this channel is great, i just wish my brain would store this knowledge better :D
Thank you for so much knowledge. How about if one of your pair pumps, you gain a huge % of impermanent loss. But a month after your 2nd coin pumps too. Does that nullify the impermanent loss. I am just confused if the movement should be at the same time to have a lesser impermanent loss.
They really are amazing animations.
What about when u get reward in the token you provided in the liquidity pool ie. you provide eth and usdt in a pool and receive eth as a reward can that cancel out your impermanent loss?
So basically all our bank deposits go through impermanent losses due to inflation but we never knew.
So if we invest long enough, the yield generated from the liquidity pool could offset IL right?
@ 5:23 Isn't 1,000,000 / 130 = 7692? not 14285?
Good catch wingy!
Why was 1,000,000 divided by 130? Why 1,000,000 ?I wached the AMM video but didn't get why you used 1M in this example ?
@@misaktopchiyan because of the “constant product” amm.. 100eth x $10000 = 1,000,000
So the constant is 1,000,000 and this needs to remain the same value even though the prices change..
That’s my memory from 8 months ago.. hopefully that is correct
Thank you for explanation! One question though, where does that 1 mil dollars come from?
I also have this question
Its not a very good quality video. I discovered multiple mistakes but at least the basics are correct.
yeah also wondering this. is it just a mistake?
Hi Whiteboard Crypto. Do you know where I can find a good explanation on how to buy crypto assets at a reduced price from a liquidity pool? Thanks!
Keep it up ser!
That's the plan!
Hey thanks for the video! It's the only one I watched covering price drop of the volitile asset in a LP! Bravo!
Still I have got a question... in your case, when price of ETH drop, the LP provider will get more ETH? Sounds like a good hedge in bear market if an investor is bullish in ETH
Yes, you can technically mitigate some of your losses by providing LP, especially if the fees are high, and even more so if that platform is paying you an extra fee as an incentive. There are "impermanent loss calculators" out there that allow you to mess around with the numbers to quickly see their results, we may create a new video explaining how the math works using a few more examples and give the calculator a shoutout :)
I am not sure, how about pair with unstable coin and stablecoin pool? Stablecoin would not rise and maintain the same 1 USD , so it will definitely impermanent loss forever if the unstable coin move up or down.
Great video, thank you! Could you tell me, what software do you use for animation?
I will have to watch this again. And again. Ad infinitum.
So it's opportunity cost in one side when the asset price rises. And "unrealized loss" on the other when the asset price drops. Ideally you want the price to remain stable so that your initial invested capital doesn't change and you only collect the fees.
So if ill be liqudity provider? The token that i invested will decrease? Or just the value? Tnx in advance.
where does 14,285 came from? @ 5:24
i suggest you leave my granny out of this
You should collaborate with finematics, another great channel like yours.
Has the video about reducing our risk as a liquidity provider been made?
Could someone break down example two using the AMM equation (x*y=K). I was able to get the first example but am struggling to get the same answers in the video for the second example.
Much appreciated
So... did I got that right? Someone can come and buy 1 ETH to the price of 100$ from the liquidity pool you're providing liquidity to it and sell that 1 ETH to the price of 110$ on let's say Binance for example (if the realtime price is higher then the worth of ETH in the pool)? And he could do that as many times as the price of ETH in the liquidity pool is not rising to the actual price of 110$? If that is true than I need to know how to find those liquidity pools which are selling ETH for a discount price!!!
Please correct me if I'm wrong and sorry if somethings not written correctly... english isn't my native language :)
de centralized lol by putting a buy/sell order to a central server that approved transfer of a item (crypto) from one wallet to another. whats different then a bank zelle to another?
So, basically a liquidity provider has to hope that either both assets rise or stay constant in value for the rewards to make the investment worth it. I guess that is why pools with very volatile coins also have very high APRs. Right?
Correct
Transaction fees could cover the impermanent loss if there are enough transactions done right ? This should be taken into account
What happens if you only provide one coin to the pool eg: eth/usdt pool where you only provide eth (this is possible on binance but there is a fee)
So when you provide liquidity, your coins' value upon deposit keep their price and are not subjected to the volatility of the market??
Hey man, I would love see a video on mark cuban’s iron finance bank run. I am reading thru the technical details but still can’t figure out what happened. Would be beneficial I think.
can you have a impermanent loss on Staking? or its only a liquid provider on a Liquid Pool?
Shouldn't we also consider fees earned through the transactions to calculate the impermanent loss or profit?
Then, in summary, is not profitable to provide liquidity(in case of variable asset & stable coin) unless the rewards you get could cover the impermanent loss.(which sounds not feasible)
I though the impermanent loss when Ethereum goes down, was positive, but either way are negative, so just better to hold ? (Unless you provide liquidity of 2 variable assets and their price go up)
Was 488 and 30 a derived numbers or did he formulate them?
so im safe in impanent loss if my position is two different stablecoins?
Sorry I’m very poor in maths - but from your analogies would that simply means in reality we better hold on to our cryptos rather than invest them in liquidity pool?
one question: if you provide liquidity you will get the ETH back, right? You provide 1000$ in ETH and get the fees. Then you want to have the ETH back and the price went up to 1200$.
Or is my thought wrone that I assume that the price will rise in the long-term?
Why is it a loss if you hold it because it is still the same amount of ETH and you even receive some of the fees. I still don't get it.
Does the price of the stablecoins in a pool ever change?
But you dont lose?? You miss out on gains. Big differens. So youre using the word lose wrong
2:42 In example #1, why did the stable coin value increase from $10,000 to $10,488? I thought only ETH value increased... Overall excellent video, appreciate it!
Because a user bought eth and provided stable coin to the pool . Eth was increased as well .
@@abhayagarwal5097 I have a small question here. Is the price of the coin going up because it is a stable coin and will always be 1Stable coin= $1 and If it wasn't a stable coin would the value of that coin go down to adjust the equation AMM (x*y=K)? Thank you
How did you come up with the number of Ether that was provided?
thanks for the knowledge
I don't get it. He initially puts 100 ETH for $10,000. If he got impermanent loss, withdraws the assets, does this mean he will only withdraw $10,000 worth of ETH and not the 100 ETH coin?