Impermanent loss

Providing two coins to a liquidity pool can leave you with less value than simply holding them when their prices move apart.

What it means

As one coin rises, traders buy it from the pool, so you end up with less of the rising coin and more of the other; fees earned can offset part or all of the gap.

What to watch

How far the two prices move apart, how much the pool earns in fees, and that the gap shrinks again if prices move back.

How Compass-Alpha uses it

Background only; not used in any figure on Compass-Alpha.