- When there's high price volatility, yield increases exponentially - so does Impermanently Loss(IPL).
- The time when the IPL is close to zero (best timing to withdraw from LP) is when the ratio of the two pooled assets remain almost the same (eg. they have risen or fallen correspondingly with each other).
- However, this can seldomhappen unless we are pooling only stablecoin pairs. (Which can but rarely lose peg.)
- Often than not, one will end up with IPL that eats into the yield and a portion of your capital becomes "yield" for the arbitragers.
Right before the crypto crash last week, I have actually created a new wallet seeded with some fresh funds to play with Defi on the Polygon chain (how dumb a timing can that be right?). Let me share some quick takeaways that I have from dabbling in this very intriguing space.
SushiSwap liquidity mining
