Impermanant loss mitigation tool

I thought id start this thread because like many before me, impermanant loss(IL) can get out of hand if you arent paying attention and this has happened to me on a few occassions. I think a great tool especially to encourage new participants to the DEX would be a tool that allows you to set some sort of stop so that you could protect yourself against IL to protect yourself when you arent monitoring your position. Lets face it, you cant stay awake 24/7 and people have jobs which mean they may not be able to access the DEX while working,

Does anyone else think this would be an appealing feature?

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This seems like an incredibly sensible option. I have seen others on here discussing the same thing especially when it comes to protecting new people who may not understand this

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Yes, it is definitely a great option to have some type of limit on the impermanent loss but I don’t know how something like that can be possible… I mean for sure an alert system can be put in place to alert you when impermanent loss is out of control but I don’t think it would be possible to withdraw your assets automatically. You hold LP tokens in your wallet, in order to withdraw your liquidity you need to sign a transaction to send the LP tokens, so you need to do it manually.
That is my humble opinion :slight_smile:

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Genius Yield might have a solution for that actually. Check them out. https://www.geniusyield.co/

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Impermanent loss is a concept that’s often misunderstood. Like with any trading strategy you need to have a game plan that includes risk management. A good goal is to aim for high enough yield from providing liquidity to compensate for the risk of impermanent loss.

If you don’t want to take on the risk of impermanent loss, there are other single-sided staking options to consider:

  • Stake in an Indigo iAsset Liquidity Provider Pool
  • Stake in a single-sided DEX like MetaDEX
  • Stake in a stable swap DEX like Minswap’s StableSwap or Ardana’s Danaswap
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Maybe I am missing something here, but wouldn’t setting a stop just put you in a position where if the IL hit a certain point you would then be accepting that loss? It seems like efforts to mitigate the IL on front end make more sense than trying to add measures for withdrawing at a certain point.

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I get the concept of IL now after a few errors but at the end of the day it is still a trade/investment and being able to set a stop that perhaps calculated what you had earned in yield combined with the current value of your LP token would be a neat feature that would encourage people to the platform and participation in more pools. I know I would find that useful. Sometimes Im away for work days on end and cannot check whats going on with the markets. If you bought an LP token and could set a stop that said if my yield plus LP token combined value dropped below 50% of my initial investement i want to sell my earned yield and my LP automatically Id definitely use it.

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Definitely, if they can incorporate a stop loss function, it would increase everyone’s risk tolerance on the platform. :clap:

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But wouldn’t a stop loss function put the liquidity of the pools at risk?

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I would agree, This would be a good tool to have at our disposal.

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Thanks for the discussion everyone. This is an important topic to consider when adding liquidity to a DEX. However I’m closing this topic because this discussion is unrelated to Indigo. Indigo isn’t a DEX and there isn’t a risk of impermanent loss due to Indigo supporting only single-sided staking.

You’re welcome to discuss strategies for mitigating impermanent loss in other forums whose projects have such risk.