Is LP farming really a sweet deal? You might end up with an Impermanent Loss!
Have you all heard of LP farming?
Does it seem really safe and profitable to earn from the trading fees? But LP farming is not a low-risk trading method at all.
If you're not careful, you could end up losing a lot of money.
Right now, @katana is offering an incredible annual yield on @SushiSwap.
(See the picture below)
But you need to be cautious.
v3 liquidity provision is an extremely risky product.
If a coin skyrockets or plummets and goes beyond the range I set for farming,
I could lose all my profits or my money could become worthless, just like trading.
If the price goes up, I need to follow along to earn fees through execution,
and if the price drops, I need to sell quickly to avoid losing too much.
Ultimately, the key is that constant adjustments are necessary to keep harvesting fees within the price range.
But how do you do that?
That's where Gamma comes in:
@GammaStrategies, @CharmFinance
Besides these, there are also tools for strategy enhancement and optimization like @steerprotocol and @vfat_io.
If you want to try LP farming, I recommend starting with Gamma or Charm.
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