Decentralized finance (DeFi) has opened the door to earning passive income through liquidity farming, but for many—including myself—the fear of impermanent loss (IL) often holds us back. The idea of losing value just by providing liquidity to a pool can feel overwhelming, especially during volatile market conditions.
This all changed when I discovered ston.fi and its Impermanent Loss Protection (ILP) feature. Not only did it restore my confidence in liquidity farming, but it also gave me the tools to farm smarter and mitigate risk effectively.
In this article, I’ll share how ston.fi’s ILP transformed my DeFi experience and provide a beginner-friendly guide to help you start farming with confidence in the STON/USDT V2 pool.
What Is Impermanent Loss?
Before understanding ILP, let’s take a quick look at impermanent loss (IL).
When you provide liquidity to a pool, the value of your deposited tokens may shift due to price changes. If one token in the pair increases or decreases significantly in value relative to the other, you might end up with fewer total assets compared to just holding the tokens separately.
Here’s a simple example:
• You deposit 1 ETH and 1,500 USDT into a pool.
• If ETH’s price doubles while USDT remains stable, the pool automatically rebalances your assets to maintain a 50/50 ratio.
• When you withdraw your tokens, your total value might be less than if you had simply held the 1 ETH and 1,500 USDT.
This difference is called impermanent loss, and it’s a major barrier for new liquidity providers.
How ston.fi’s ILP Works
ston.fi’s Impermanent Loss Protection (ILP) offers a safety net that reduces the risks associated with impermanent loss. Here’s what you need to know about its coverage in the STON/USDT V2 pool:
• Coverage Period: From January 1 to January 31, 2025, ston.fi provides up to 5.72% protection against losses caused by a 50% price drop in $STON.
• Compensation Cap: Each user is eligible to claim up to $100 in IL protection during this period.
With this innovative feature, you can farm confidently, knowing your potential losses are cushioned during volatile market conditions.
My Experience with ston.fi’s ILP
Before finding ston.fi, I provided liquidity in other pools and experienced significant impermanent loss during a market downturn. The frustration of watching my funds shrink almost made me quit DeFi farming altogether.
ston.fi’s ILP, however, changed everything. Knowing that part of my potential losses would be covered, I joined the STON/USDT V2 pool and started farming again. This time, I felt secure enough to focus on earning rewards without constant worry about market fluctuations.
The result? A smoother, more rewarding farming experience—one I’m confident recommending to others.
Beginner’s Guide to Farming on ston.fi
Ready to get started? Follow these steps to begin farming in the STON/USDT V2 pool:
1. Learn the Basics
• Liquidity Farming: Earn rewards by providing token pairs (STON and USDT in this case) to a liquidity pool.
• STON/USDT Pool: Deposit equal values of STON and USDT to participate.
2. Set Up Your Wallet and Add Funds
• Create a wallet like tonkeeper or another supported wallet.
• Purchase STON and USDT on a cryptocurrency exchange, then transfer them to your wallet.
3. Visit ston.fi
• Go to the STON/USDT V2 pool on ston.fi.
• Connect your wallet to the platform.
4. Add Liquidity
• Deposit an equal value of STON and USDT into the pool.
• Confirm the transaction in your wallet.
5. Stake and Earn
• Stake your LP tokens (received after adding liquidity) to start earning rewards.
• Monitor your earnings and enjoy the peace of mind provided by ILP.
6. Withdraw and Claim Protection
• Withdraw your funds when ready.
• If you’ve experienced impermanent loss, claim your compensation through ston.fi’s ILP (if eligible).
Why ILP Is a Game-Changer for Beginners
Farming can be intimidating for newcomers, especially with risks like impermanent loss. ston.fi’s ILP helps eliminate those fears by offering:
1. A Safety Net: Mitigates potential losses during volatile periods.
2. Peace of Mind: Encourages participation without constant worry.
3. Accessibility: Easy-to-use features perfect for DeFi beginners.
Final Thoughts
ston.fi’s Impermanent Loss Protection (ILP) isn’t just a feature—it’s a breakthrough that makes DeFi farming safer and more accessible for everyone. For me, it turned what once felt like a risky gamble into a dependable source of passive income.
If you’re hesitant about providing liquidity or want to start farming with confidence, the STON/USDT V2 pool is a great place to begin. With competitive rewards and ILP to back you up, there’s no better time to dive into DeFi.
🔗 Start Your Farming Journey with ston.fi
Don’t let impermanent loss hold you back—secure your future in DeFi today.