I've small question related to liquidity pools and impermanent loss.
I'm trying to wrap my head around it and based on my understanding:
- currently price of RBS is 0.2$
- I would add my funds to liquidity pool (pair RBS-BUSD) in relation: 1000 usd / 1000 usd
in that case I would need 5000 RBS tokens and 1000 usd worth od BUSD. Is that correct?
Now, what would happen if price of RBS would:
a) scenario one: RBS would drop down to 0.1$ (50% drop)
b) scenario two: RBS would go up to 0.4% (100% increase)
I presume that the moment I exit liquidity pool, then I would end up still with 1000usd worth of BUSD, but amount of RBS tokens would be different.
Now, my question is: how many RBS tokens would I have at the end of the day (depending on the scenario).
Enjoy your weekend buddy,
Yours, Piotr
Hi Piotr,
That is correct.
You would have 1500 USD in total if you had the two cryptos separately. But you will have 707 dollars worth of BUSD(707 BUSD) and 707 dollars worth of RBS(7070 RBS) in the liquidity pool. (%5,72 extra loss because of impermanent loss)
You would have 3000 USD if you had the two cryptos in separate. But you will have 2828 USD worth of tokens in the liquidity pool. (3535,5 RBS and 1414,4 BUSD)
Best Regards,
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thanks for that feedback @muratkbesiroglu
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