Glossary
Impermanent Loss
The relative loss from providing liquidity, compared with simply holding both tokens.
Impermanent loss is the gap between what your deposit is worth in an AMM pool versus simply holding both tokens. The pool automatically sells the asset that rises and buys the one that falls.
At a 2x price move the loss is roughly 5.7%; at 4x it is around 20%. It becomes permanent the moment you withdraw. Fees and incentives have to beat it for the position to make sense.
Related terms
Airdrop
Free tokens distributed to wallet addresses, usually to reward early users of a protocol.
AMM
Automated Market Maker — a protocol that prices assets with a formula instead of an order book.
APR vs APY
APR is the yearly rate without compounding; APY includes compounding and is always higher.
ATH
All-Time High — the highest price an asset has ever traded at.
Bear Market
A prolonged decline, conventionally 20% or more from recent highs.
Bull Market
A prolonged rise driven by new demand, easy credit and rising confidence.