RE: LeoThread 2025-08-12 13:38
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Is there any danger of losing your tokens in a liquidity pool (assuming I don't lose my keys)?
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You are viewing a single comment's thread:
Is there any danger of losing your tokens in a liquidity pool (assuming I don't lose my keys)?
Read up about imperanent loss. I can say I have been hurt bad several times in the past. It is very much an active game
LSTR:LEO is the only pool that don't have that risk.
Both growth together
You cannot lose tokens but you can end up with one side being empty and big bags of worthless tokens on the other side.
No exceptions. Sorry @yecier - Not even for LEO token.
Make sense. But if I’m holding both tokens anyway the only real danger is that I’m unhedging myself because if one crashes I’ll probably get stuck with that one?
Exactly.
If you trust the market to keep the swap price fair, that is the only downside. If you do not trust the market (or expect shocks), you need to keep an eye on it so that you can withdraw if you no longer like the ratio.
I mean LSTR is leveraged with LEO, if LEO surges LSTR does it too.
There is not impermanent loss risk there
NFADYORETCSHRUG
The risk is impermanent loss.
I wrote about the risk of liquidity pools in my latest post.
https://peakd.com/hive-146620/@logen9f/how-to-earn-passive-income
Do that mean it’s best for someone providing liquidity if the assets stay close to each other in gains? Would it be bad for me to provide liquidity for hive/leo if Leo 10x’s from here?
Yes. I added liquidity in CENT:LEO pool before and I noticed that the LEO I put in was decreasing while CENT was increasing. When I removed it and swapped CENT for LEO, it still didn't cover the LEO I lost.
So what’s the point of providing liquidity if you inevitably end up with the weaker coin?
Get ready to pull out when you see it going against you. One advantage of LP is that it's much easier to withdraw. No waiting for days unlike staking.
Would it be smart for me to withdraw and reset often then?
Possible but you'll miss the reward payout for the day. Imo, it's better to track market prices and get ready to pullout.
Yes. There definitely is.