RE: Splinter-caking?! Pancakeswap: How to earn? Part 2

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153 words

If price drop, that is value loss.

Impairment losses are referring when the pair ratio go off. For example, when one token rise 100% and the other tokens rise 10%, you will realise that you end up with more of the 2nd tokens and no longer 50% token 1 and 50% tokens 2. If you have kept the tokens, you will have more values, the different from holding the tokens and the changes in the tokens amt due to lp is called the impairment loss.

If you provide lp with one of them being the stable coin, you will face impairment losses when the token rise or fall in value as the ratio is off.

So when providing LP with pairing to stablecoin, you need to believe that the token is stable in value for the long term, if it rise too much, your impairment has been very huge.

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