STON.fi introduces protection against impermanent loss🛡️
📝For those unfamiliar, impermanent loss occurs when, after providing liquidity, the value of one or both tokens in the pool changes significantly. The liquidity pool adjusts the ratio of the tokens to 1:1, which results in impermanent loss.
💢For example, if you provide liquidity and one of the tokens increases in value by 5x📈, you will end up losing 25% compared to if you had simply held the tokens in your wallet. Impermanent loss increases even more if one token rises while the other falls📉.
In summary🧐, impermanent loss is one of the most frustrating concepts in the world of DeFi.
What does STON.fi offer❓
Today, STON.fi introduced partial protection against impermanent loss for the $STON/$USDT pool.
The key idea☝️ is that if impermanent loss occurs up to 5.72% (which corresponds to a 50% decrease in the asset's value), the exchange will compensate you for the loss😌.
Important details👇:
💰 Monthly protection budget: $10,000
💎 Maximum payout per user: $100 (in STON tokens)
🔄 Automatic compensation: Losses are automatically compensated.
⏳ Duration: From December 12, 00:00 UTC to December 31, 23:59 UTC
🗣️In my opinion, this system is very interesting and smart. Clearly, this is just the beginning, and this initial implementation is more of a "test version."
In the future, I think such a system will be temporarily activated for other liquidity pools as well and will be just as easy to launch as Farming👨🌾.
Additionally, in the future, STON.fi plans to add Weighted Pools, which will reduce the likelihood of impermanent loss🛡️.
What do you think about this update🤔 ?