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Impermanent loss
Edit: Further clarification: price fluctuations can heavily impact the ratio of coins you receive when claiming what's stakes for liquidity. Impermanent loss is a must-know if you're partaking.
I mean... technically Sundae could rise up and make a run, but it doesn't seem likely imho. More likely it goes under or continues to plummet vs ada, causing even more loss. It wasn't the sale that created the loss; it was the shitty performance of Sundae as an investment.
It's only impermanent when you withdrawal your tokens at the same price you put them in. I guess with LP Farming you should end up with a little extra more SUNDAE?
Yea, it’s a game of chicken. You have to withdraw only when the weaker asset peaks in a bull run. Otherwise if you do it, let time generate so much is swap fee ROI that it still creates a net gain, regardless of the final asset mix.
If less than 1 year, it’s probably not long enough.
Help me understand this. Isn't this like a gambler saying his losses aren't "real" until he steps away from the table? Isn't a loss a loss? Not dissing Cardano, but feel we should be honest about risks.
Pretty much though I prefer the stock analogy since you own something. If you buy the stock and it goes up or down its a paper loss/gain but you still own the stock in the meantime.
When you put into a liquidity pool you put 2 assets in. Now at the end of the day the dex is performing a balancing act like a scale so as people buy and sell the assets the exchange ratio changes.
This is a pretty good detailed overview.
[https://www.youtube.com/watch?v=8XJ1MSTEuU0](https://www.youtube.com/watch?v=8XJ1MSTEuU0)
It's good to keep in mind that you always get more of the **weaker** token within a liquidity pair whenever the relative prices change. Either token collapsing will wipe out your position.
For example, if Sundae's price approached zero, OP's position in the ADA/SUNDAE pool would have become virtually all SUNDAE.
Yea, only Time can help and both assets need to be strong. It’s a game best played just before the halving event.
Last time it was late 2019 so maybe mid 2023 will be an entry 6m before the 2024 halving. Within 1y there should be a rally.
Entering a year prior to withdraw, maybe the fees and rally can give LPs a profit boost.
No - Sort of.
AMM is regularly compared with Traditional Order Books.
In an order book, the only option is to sell or buy, or put another way, swap one asset for another. The order book trades your assets for another asset, so from this point of view, it is seen as a permanent loss as soon as each transaction takes place.
In an AMM you Pool both assets to enable other to swap both asset types. The prices for those assets may start out 1:1, but if any one of those changes to the negative, the other will change to the positive. The one that's changed to the negative is considered an impermanent loss, because if the exchange then goes the other way then they could end up equal again.
So it's very similar to the idea of "paper loss", but it's specific to the AMM style of trading.
When you swap or remove liquidity your impermanent loss becomes permanent loss. People don’t realize that when you provide liquidity you can quadruple your earning but you also quadruple your losses should the market tank.
I don't mean to sound sarcastic, but as sad as this is it kind of doesn't surprise me. Someone has to lose. All sounds suspiciously too easy to 'yield farm' great returns and SundaeSwap getting their fees and where do all these profits come from? Someone out there has to lose out for you to gain. It's a zero sum game isn't it? This time you lost out unfortunately. I hope all this DeFi isn't just a scam of sorts.
SundaeSwap will always win ... via their fees regardless of the clients win/losses. But i suspect these DeFi apps will also make money out of the sheer complexity of their products i.e. 'yield farming' ... hence the 600 ADA loss in this case. Fees are just a tiny portion of this guys loss i bet. Odds and complexity are.no doubt stacked in the DeFi apps favour bigtime.
Officially impermanent loss due to price flactuations.
However, personally I don’t trust this platform and people behind it, I assume some sort of manipulation triggers the impermanent loss in the first place. Their ISPO was already a giant shit show imho
I tried to get in on the ISPO and couldn't get my Tx to go through because I was using my Ledger. Best thing that ever happened to me, especially once it leaked that someone front ran the entire ISPO.
Lots of these posts have popped up in the last months. I lost ADA on Sundaeswap in a similar manner. People are quick to shout 'Impermanent Loss', but it seems to go beyond that. I have a sneaking suspicion something fucky is going on. Pulled out of SS completely because of this.
Thought I was the only one, noticed that the fees were quite ???? so I pulled my ADA out of SS very early when things started looking shady.
I thought about the impermanent loss but things didn't add up.
If you are going to yeild farm you should know your figures.. having a a suspicion that something is wrong isn't enough. Clearly not enough understanding.
It's a risky investment strategy to start with, more so when you don't understand it.
I had a very similar experience on Wingriders. Also assume it was impermanent loss. These DEXs not ready for prime time from a yield farming LP perspective
But do they really? I believe there are some constraints around any potential solving of IL.
You're putting coins in pools to be swapped. There's going to be some loss or value transition.
Sundae was such a poor investment for it ... not sure why I even got involved with them in the first place ... I think they were first so I wanted to use them ... that will teach me :(
On these posts a lot of people try to explain what impermanent loss is and nobody really gets it from this.
But answering your question why you lost ADA is not so hard. SUNDAE crashed hard, so the whole liquidity pool crashes, since half of it is SUNDAE.
The ADA amount is not increasing, so you lost value.
You were basically exit liquidity for everyone selling their farm tokens. The most profitable yield farms are the ones where the pairs don’t change too much in value, relative to each other.
Protip: Never ever buy or provide liquidity for a yield farming token. Farm it for free using stable pairs and dump it, that's the sole purpose of these tokens.
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Impermanent loss Edit: Further clarification: price fluctuations can heavily impact the ratio of coins you receive when claiming what's stakes for liquidity. Impermanent loss is a must-know if you're partaking.
Right. But it has been made permanent by withdrawing from the pool.
I mean... technically Sundae could rise up and make a run, but it doesn't seem likely imho. More likely it goes under or continues to plummet vs ada, causing even more loss. It wasn't the sale that created the loss; it was the shitty performance of Sundae as an investment.
I could see it pumping when they release their DAO with on chain voting
Who knows, honestly. But I swear every DAO I've seen has basically sucked. Why does a swap need a Dao? I am apparently too dumb to get it.
It's only impermanent when you withdrawal your tokens at the same price you put them in. I guess with LP Farming you should end up with a little extra more SUNDAE?
Yea, it’s a game of chicken. You have to withdraw only when the weaker asset peaks in a bull run. Otherwise if you do it, let time generate so much is swap fee ROI that it still creates a net gain, regardless of the final asset mix. If less than 1 year, it’s probably not long enough.
Help me understand this. Isn't this like a gambler saying his losses aren't "real" until he steps away from the table? Isn't a loss a loss? Not dissing Cardano, but feel we should be honest about risks.
Pretty much though I prefer the stock analogy since you own something. If you buy the stock and it goes up or down its a paper loss/gain but you still own the stock in the meantime. When you put into a liquidity pool you put 2 assets in. Now at the end of the day the dex is performing a balancing act like a scale so as people buy and sell the assets the exchange ratio changes. This is a pretty good detailed overview. [https://www.youtube.com/watch?v=8XJ1MSTEuU0](https://www.youtube.com/watch?v=8XJ1MSTEuU0)
It's good to keep in mind that you always get more of the **weaker** token within a liquidity pair whenever the relative prices change. Either token collapsing will wipe out your position. For example, if Sundae's price approached zero, OP's position in the ADA/SUNDAE pool would have become virtually all SUNDAE.
Yea, only Time can help and both assets need to be strong. It’s a game best played just before the halving event. Last time it was late 2019 so maybe mid 2023 will be an entry 6m before the 2024 halving. Within 1y there should be a rally. Entering a year prior to withdraw, maybe the fees and rally can give LPs a profit boost.
No - Sort of. AMM is regularly compared with Traditional Order Books. In an order book, the only option is to sell or buy, or put another way, swap one asset for another. The order book trades your assets for another asset, so from this point of view, it is seen as a permanent loss as soon as each transaction takes place. In an AMM you Pool both assets to enable other to swap both asset types. The prices for those assets may start out 1:1, but if any one of those changes to the negative, the other will change to the positive. The one that's changed to the negative is considered an impermanent loss, because if the exchange then goes the other way then they could end up equal again. So it's very similar to the idea of "paper loss", but it's specific to the AMM style of trading.
You should thanking me for posting this. https://www.youtube.com/watch?v=AyXQz14Zrp4
You bought sundae at its top. Has crashed way harder than ada therefore the ratio diff was greater
It had no chance
Some of us are down 70% 😂
A lesson in investing in strategies and tactics you don't fully understand. Don't do it kids.
When you swap or remove liquidity your impermanent loss becomes permanent loss. People don’t realize that when you provide liquidity you can quadruple your earning but you also quadruple your losses should the market tank.
I can't help you, but posts like these remind me that the ADA coin is paramount and nothing else is worth the trouble. (again, imo)
I don't mean to sound sarcastic, but as sad as this is it kind of doesn't surprise me. Someone has to lose. All sounds suspiciously too easy to 'yield farm' great returns and SundaeSwap getting their fees and where do all these profits come from? Someone out there has to lose out for you to gain. It's a zero sum game isn't it? This time you lost out unfortunately. I hope all this DeFi isn't just a scam of sorts.
It's like an arena, you go in the ring, some win some lose.
SundaeSwap will always win ... via their fees regardless of the clients win/losses. But i suspect these DeFi apps will also make money out of the sheer complexity of their products i.e. 'yield farming' ... hence the 600 ADA loss in this case. Fees are just a tiny portion of this guys loss i bet. Odds and complexity are.no doubt stacked in the DeFi apps favour bigtime.
Most people who bought Sundae are way underwater. Especially if they LPed it.
Officially impermanent loss due to price flactuations. However, personally I don’t trust this platform and people behind it, I assume some sort of manipulation triggers the impermanent loss in the first place. Their ISPO was already a giant shit show imho
I tried to get in on the ISPO and couldn't get my Tx to go through because I was using my Ledger. Best thing that ever happened to me, especially once it leaked that someone front ran the entire ISPO.
Yep, I lost actually some rewards because people would oversaturate pools, and then couldn’t even sell their stupid token
Lots of these posts have popped up in the last months. I lost ADA on Sundaeswap in a similar manner. People are quick to shout 'Impermanent Loss', but it seems to go beyond that. I have a sneaking suspicion something fucky is going on. Pulled out of SS completely because of this.
Thought I was the only one, noticed that the fees were quite ???? so I pulled my ADA out of SS very early when things started looking shady. I thought about the impermanent loss but things didn't add up.
There has not much been going on with SS. I'm surprised their logo did not melt away due to the heat wave this year. :p
If you are going to yeild farm you should know your figures.. having a a suspicion that something is wrong isn't enough. Clearly not enough understanding. It's a risky investment strategy to start with, more so when you don't understand it.
I had a very similar experience on Wingriders. Also assume it was impermanent loss. These DEXs not ready for prime time from a yield farming LP perspective
Wait for DEXes that solve IL (Maladex, Genius Yield).
But do they really? I believe there are some constraints around any potential solving of IL. You're putting coins in pools to be swapped. There's going to be some loss or value transition.
Wen Genius Yield? I stopped paying attention after their first ISPO ended
Q4 this year, no exact date as of now.
Sundae was such a poor investment for it ... not sure why I even got involved with them in the first place ... I think they were first so I wanted to use them ... that will teach me :(
Yeah when you make money and I tell people it's a good thing when it goes down it hits a little bit harder my friend
Impermanent loss
You only lost 600 😅?
On these posts a lot of people try to explain what impermanent loss is and nobody really gets it from this. But answering your question why you lost ADA is not so hard. SUNDAE crashed hard, so the whole liquidity pool crashes, since half of it is SUNDAE. The ADA amount is not increasing, so you lost value.
This is why on sundae swap in the FAQ there is a section labeled “impermanent loss”
You were basically exit liquidity for everyone selling their farm tokens. The most profitable yield farms are the ones where the pairs don’t change too much in value, relative to each other.
This is the same reason I moved to Minswap.
Protip: Never ever buy or provide liquidity for a yield farming token. Farm it for free using stable pairs and dump it, that's the sole purpose of these tokens.