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About Unequal-Weight Market Making

PreviousWhat is an Impermanent Loss?NextAbout DOP

Last updated 4 years ago

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Most Swaps have a market-making ratio of 50/50, that is, 50% of the total value of each of the tokens in the transaction pair is deposited, but 50/50 transaction pairs often bring great risks to users.

Comparison of the impermanent loss caused by different proportions of market-making, with calculations:

As can be seen from the above table, assuming that the trading pair is EOS/USDT, when the price of USDT stays unchanged and EOS raises and falls in price:

50/50 impermanent loss> 80/20 impermanent loss> 98/2 impermanent loss

This shows that different market-making ratios will bring different effects to impermanent loss.

Impermanent loss calculator:

https://coinmarketcap.com/yield-farming/