General Warnings on Liquidity Providing

In order to provide liquidity you always need to provide the same value of both tokens. This means that if you want to put a liquidity worth of 100 $ILA tokens and let’s say, it’s worth 100$ at that time, you also need to provide 100$ worth of BUSD tokens.

While providing liquidity you have to understand the phenomenon of impermanent loss. Impermanent loss happens when the price of your tokens changes compared to when you deposited them in the pool. The larger the change is, the bigger the loss.

So why do liquidity providers still provide liquidity if they’re exposed to potential losses? Well, the impermanent loss can still be counteracted by other ways. In fact, even pools that are quite exposed to impermanent loss can be profitable thanks to the trading fees or high APR.

While we have a large amount of ILA tokens reserved for the liquidity mining program, these rewards will be distributed among all liquidity providers that are staking, so the APR and rewards will change accordingly.

Final note: the larger the liquidity, the healthier the market. This means less volatility on each trade, with the risk of impermanent loss decreasing drastically.

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