What are the risks with liquidity pools?

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Recently, I created a post called an interesting income source on Hive – Providing Liquidity and there were plenty of interesting questions in the comment section. I explained similar things several times and I thought it might be a good idea to explain the risks related to liquidity pools in a separate post. It's not an easy task and instead of explaining what impermanent loss is, I try to show the effect through some examples.

For that I use a website that allows you to play with numbers and calculate the loss/gain you would make in different situations.


With ph1102@ph1102, I'm running the liotes@liotes project.

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