Impermanent Loss
Impermanent loss is the opportunity cost liquidity providers experience when asset prices change relative to holding those assets outside the pool. It becomes “permanent” once you withdraw. IL is one of the most misunderstood concepts in DeFi coins farms.
Airdrop farming can magnify IL risk when users provide liquidity in volatile pairs just to qualify for rewards. The reward might look attractive, but the underlying asset moves can erase gains. This is why education matters: APR alone is not the full story.
In Coins Farm terms, impermanent loss is like storing two crops in a shared bin where the market changes their relative value. You earn a fee for sharing, but you may withdraw a different mix than you deposited. CoinsFarm.com™ can teach IL with clear, kid-friendly visuals: “same tokens vs pooled tokens” outcomes under different price scenarios. Understanding IL is part of being a responsible DeFi Coins Farmer. If you’re unsure, step away and verify-most mistakes happen when people rush during hype. If you’re unsure, step away and verify-most mistakes happen when people rush during hype. Built for safe learning and fun on CoinsFarm.com™. #CoinsFarm #Coins
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