@Moncats 17 December 2021 more from that month

CRYPTO LIQUIDITY AND IMPERMANENT LOSS IN LAYMAN TERM A lot of people get lost when the term #liquidity and impermanent lost is mentioned and to confuse them more, an expert in the crypto space pour out different language during the process of explaining those term which in turn kill the brain of the newbie in the crypto space, well, let's try to use a real-life instance to explain the above and I hope after this, liquidity and impermanent lost won't be a problem to anyone. LIQUIDITY : Let's assume that there is a firm or company that is exchanging leather shoes for rubber shoes and this company noticed that its quantity I.e the leather shoe in its stock won't cope with the demand. The Company asked interested people who has leather shoes to help them out by joining their team and any profit made from the exchange will be given to them depending on the quota and also with rubber shoe plus the remains of the person leather shoe to balance the return. That's how liquidity works. (HEY!! TAKE A DEEP BREATH TO READ THIS, BELIEVE ME, I WON'T BLOW ANY CRYPTO SPACE SLANG.) #IMPERMANENT LOSS: Hope you understood liquidity because impermanent lost birth is from liquidity I.e Since the company/firm is in charge of the business dealing, the overall return of those who join forces with them to make the exchange of leather shoes for rubber shoes is kept on their lookout. Now, if the third party individual (the liquidity provider) wants out from the business(remove liquidity), then the remains of his/her leather shoe plus the rubber shoes (which was exchanged) plus the profit of the business will be given to the person depending on the person supply (few leather shoes + rubber shoe + profit) #Profit = its percentage based on the liquidity he/she provided. Now here is the real deal; Remember: the rubber shoe cost less than the leather shoe, so what's the person gets is a small quantity of leather shoe + a high quantity of leather shoe which will equal the overall cost value of the shoe the person supply plus the profit earned from the business. Don't forget, the market value of leather shoes is high and that of rubber shoes is low so what the person gets is the same as what he gave to the company excluding the profit but the person won't like it because it will be tough to get high income from the rubber shoe he/she received at the end of the business deal. That's an impermanent loss. HOW TO COPE WITH IMPERMANENT LOSS: 1. The individual wait till the business deals balance the rubber shoe and leather shoe to a good proportion. 2. Some incentive is attached by the company/firm as a way to say thank you, in crypto space is called FARMING 3. The profit earn (let bring a bit of crypto term, Every trade has a fee called liquidity fee and we know about that, right? This fee is shared between liquidity providers based on the proportion of liquidity provided). Now let's blow crypto space grammar, huh. Liquidity is provided in pairs so if you grab the set-up as explained above, the pairing will be well understood. I'm tired. Wish noisecash had formatting tools to beautify this writeup. #Lliquidity #crypto #me #smartbch #bch