Impermanent loss threatens the promise of AMMs as a mechanism for democratizing liquidity provision and enabling passive market-making by any user with latent capital. Basically, a person who wants to do liquidity mining “lends” liquidity to a certain pool (Uniswap). Every investor deserves an instrument to calculate possible losses/incomes before providing liquidity. The Advanced Impermanent Loss calculator is a tool designed specifically for this purpose: it allows you to figure out potential losses or incomes you may experience when providing liquidity as a result of volatility in a trading pair.

UNI
Uniswap pools everyone’s liquidity together and makes markets according to a deterministic algorithm. This algorithm, known as an automated market maker (AMM), quotes prices to the end user according to some pre-defined rule set.

Liquidity provided by service users

To make a long story short, AMM brings the possibility to exchange digital assets like DAI for ETH without the need to interact with centralized service providers. AMMs operability is completely user-driven and relies on liquidity mass provided by service users. As a live example, ETH for DAI swap on Uniswap is a direct trade of assets against the liquidity pool.

Uniswap
Automated liquidity protocol on Ethereum

Impermanent loss usually occurs in standard liquidity pools where the liquidity provider obligated to keep both assets in a correct ratio but the price of tokens volatile and diverge in one or another direction where higher difference means greater impermanent loss. (video)

Impermanent loss is a direct threat to the popularization of AMM principles and decentralized markets of passive income for anyone with idle assets. However, recently discovered strategies of risk-minimization turn automatic market makers into an efficient solution for maintaining liquidity decentralization.

Impermanent Loss Explained | Binance Academy
Impermanent loss is when you provide cryptocurrency to a liquidity pool, and the price of your deposited tokens changes since you deposited them.

The market is full of utilities for calculating potential impermanent losses, but most of them are useless for real-life calculations. In this regard, the defiyield.info team has developed a unique free-to-use IL calculator.

Why Impermanent Loss Calculators Are Wrong And How To Avoid Incorrect Assessment Of The Money Waste
AMM technology or Automated Market Maker is one of the key spheres that makes DeFi an open decentralized financial ecosystem. To make a long story short, AMM brings the possibility to exchange…

DeriSwap, which Andre is developing, will probably be used to prevent IL. Howso? The yield gained will be used to counteract the cost of purchasing a put option. This is genius.

Yield is the cost of purchasing a put option. With greater yields, the more protection against any IL. With greater IL protection, the greater the yields...

This incentivizes people who want to have IL protection to use yearns vaults/strategies. The greater the yield bearing strategy, the lower the IL cost. This also incentivizes strategists to create high yield bearing strategies. This is because strategists get a direct fee from people that use their strategies for their farming. If their strategy produces the highest yield, their strategy also produces the lowest impermanent loss. andrecronje.medium.com/deriswap Deriswap allows for a consolidated, capital efficient market for trading, Options, Futures, and Loans, allowing LPs to keep their exposure and enjoy additional fees and rewards.

Yield Farming

So you might want to explore Yield Farming, the possibility of receiving “free” tokens by providing liquidity to a pool? So what is Yield Farming and how does it use Liquidity Mining?

In the world of decentralized finance, "Farming" is a way to earn interest on your assets through various platforms, which specialize in lending (@aaveaave), profit-earning strategies (@iearnfinance), or aggregators (@DraculaProtocol).

The risk varies depending on the platform, but generally speaking the higher the return (APR), the greater the risk. It is possible that you’ll lose all of your funds if you deposit your assets to a malicious or vulnerable platform, so do your own research before depositing.

It doesn’t make sense to Yield Farm with less than $1,000 worth of assets. Transaction fees for interacting with platforms on the $ETH blockchain, known as gas prices, will cost more than what you’ll earn. Monitor gas price ethgasstation

Those are the basics, next I’m going to give an example of how to start farming. Remember, don’t put in more than you can afford to lose. Although crypto can be extremely profitable, it is still relatively new and the risks are much higher than traditional finance.

Before long, the APYs promised by many of these platforms skyrocketed and finding the highest return for a single person was next to impossible. Hence projects such as yearn.finance, i.e. platforms for the automatic management of funds through the choice of risk to be used for Yield Farming.

Yearn.finance: what is it and how does it works?
Now that we have presented the world of Yield Farming and that we understand how it works from a general point of view, let’s try to understand which project is the most famous in this area and why…

To start, you’ll need a crypto wallet. I recommend https://metamask.io, as you can purchase $ETH through it. Save the 12-word seed phrase and keep it secret. You can send any $ETH you have to your new wallet address

How to set up a Metamask wallet
Online users are becoming increasingly resistant with one-click social login functionality via Facebook. It is a huge privacy concern. A one-click, cryptographically-secure login flow using the MetaMask extension, with all data stored on your own device, is a fantastic alternative.

I look for the best current Yield Farms through @Coingecko, here: coingecko.com/yield-farming. Most of the platforms listed are battle-tested and relatively safe, with audit information for each farm. I look for farms that allow $BTC, $ETH or $LINK to be used as the base asset

In this example, I'll choose the SushiSwap $LINK / $ETH pool. Select the link underneath the ‘Pool’ column. Once on SushiSwap, deposit $LINK and $ETH in an even ratio to become a liquidity provider (LP). Depositing will cost gas (in $ETH) and it may take several minutes.

You'll get an LP token that represents your share, which must be ‘staked’ in order to earn rewards in $SUSHI. Staking is another transaction and will cost you $ETH. To claim your $SUSHI rewards, you will have to ‘harvest’ them every so often, which can be expensive. The solution? Stake your LP token through @DraculaProtocol and the rewards will be harvested automatically at no cost. In order to stake through them, you can’t already be staked on SushiSwap.

You should be staked through a farm of your choice and earning yields! But how do you know how much you’ve made? I track my earnings through @zapper_fi or
@DeBankDeFi, depending on the pool. Both are great tools for portfolio value and pending yields. A protocol that allows Bitcoin holders to effectively utilize $BTC to farm yields? Check $BADGER as they can interface with the hundreds of billions in $BTC. A new bluechip emerging that is only~1 month old yet is commanding a top 10 TVL spot. Incredibly impressive!

Badger
A yield aggregator with a focus on generating yield for Bitcoin holders. Badger allows anyone to take advantage of cutting edge investment strategies while saving on gas and to earn the $badger token. The SETT vaults employ strategies that are voted in by the community
Zapper - Dashboard for DeFi
A simple dashboard for DeFi. Easily track and visualize all your DeFi assets and liabilities in one simple interface.
DeBank | DeFi Wallet for Ethereum Users
A DeFi wallet for managaging and tracking your DeFi portfolio, with data and analytics for decentralized lending, stablecoins, margin trading and DEX projects.
Nomi served some rotten sushi, but Maki and team have done a great job turning things around. Space for both $UNI & $SUSHI in a 60 trillion mc ecosystem
2021
Hard to follow all of the channels — news with Sushiswap here, we will distill and concisely what you can anticipate from us. Soft-launch is slated for mid-January with a version including some…

Single-token exposure

The benefits of risk-minimized liquidity provision and single-token exposure turn AMMs into a far more robust and efficient solution for driving decentralized liquidity. The @Chainlink pool is one of the largest pools on Bancor and has some of the highest APY. LPs can stake single-sided & earn $BNT rewards + swap fees w/ protection from IL. The APY on the $LINK side is currently 37%.

Beginner’s Guide to (Getting Rekt by) Impermanent Loss
Automated market maker (AMM) technology has taken off in spite of one of DeFi’s dirty secrets: Users who provide liquidity to AMMs can see their staked tokens lose value compared to simply holding…

Conclusion

It has been remarkable to see DeFi explode by handing over control to the users who deposit assets in the system. The results are simply incredible.

"The investors, founders, employees, workers and users are now going to be owners. These kinds of things were simply not possible before Ethereum. A blockchain is a really great accounting mechanism for the Internet. Ethereum’s ERC-20 token standard has become the default way to express value in new kinds of systems. With this digital backbone, we are now able to include communities of people in the creation and distribution of digital capital."

Community Capitalism
The transition from feudal lords to protocol participants