Liquidity Provision and Impermanent Loss

The lessons

1. J303-01What providing liquidity actually isState what an LP position is a claim on, and what it automatically does with your capitalabout 31 min · opens on The Curve UST pools, May 2022
2. J303-02Impermanent loss, derivedDerive the impermanent loss formula from the constant product invariantabout 42 min · opens on Loss versus rebalancing, formalised
3. J303-03The breakeven calculationConvert an advertised fee yield into the price band over which the position breaks evenabout 42 min · opens on Bancor's impermanent loss protection, 19 June 2022
4. J303-04Concentrated liquidityCompute the fee multiplier a chosen range buys, and what it costs in time out of rangeabout 33 min · opens on Risks and returns of Uniswap v3 liquidity providers
5. J303-05Pool selectionExplain why a pool's advertised fee yield overstates what a passive provider receivesabout 32 min · opens on The just-in-time liquidity paradox

Labs

• J303-L

  Model it, then live it

  Build an LP model and project a position across three price paths against holding; the assessed half is the impermanent loss and liquidation mathematics paper, twenty timed questions, 18 of 20 to pass. Running the same position for two weeks and reconciling the model against reality is optional enrichment, on BSC testnet from the sandbox or, if you choose, with small real capital on your own devices; the platform never asks for it and never grades it.