Impermanent Loss in DeFi: Strategies to Mitigate Risk
The thread discusses impermanent loss (IL), a key concept in decentralized finance (DeFi) where liquidity providers can experience a loss in value over time despite generating fees. IL often occurs when one asset in a liquidity pool pair, such as a stablecoin and a volatile asset, appreciates or depreciates significantly relative to the other. To mitigate IL, QuickSwap's V3 DEX offers active liquidity management (ALM) options in collaboration with protocols like GammaStrategies, SteerProtocol, IchiFoundation, and DefiEdge. With ALM, liquidity providers can select a narrow price range for providing liquidity, avoiding losses from volatile price movements while offering greater market depth.