What is an Impermanent Loss and How to Avoid it

Michael Taylor20 Jun, 2025Technology

Imagine lending your assets to a trusted person only to get them back devalued and reshuffled even though the other person didn't steal anything. This loss is what is known as an impermanent loss in the defi world. Not a scam, not a fraud, and not even a hack - it is simply a hidden cost of playing the role of a market maker in the decentralized finance world. So, basically, if you are providing liquidity, you stand at a silent risk at all times. The benefits, though, are so lucrative that it is worth the risk.