When you put your crypto into a liquidity pool, a smart contract that holds paired tokens to enable trading on decentralized exchanges. Also known as automated market maker (AMM), it’s how platforms like Uniswap and PancakeSwap make trading possible without order books. But for every dollar you earn in fees, there’s a real chance you could lose more in impermanent loss, the drop in value you experience when the price of your deposited tokens shifts dramatically.
Liquidity pool risk isn’t just about market swings—it’s about how the system works under pressure. If you deposit ETH and USDC into a pool and ETH drops 40%, your share of the pool gets rebalanced to hold more USDC and less ETH. Even if ETH later recovers, you still end up with fewer ETH than if you’d just held it. This isn’t a bug—it’s built into the math. And it gets worse when one token is volatile or fake, like the abandoned SRM token from Serum Swap or the dead KONG token from KongSwap. Those projects didn’t just fade—they dragged liquidity down with them, leaving users with worthless LP tokens. You can’t just pick any pool and hope for the best. You need to ask: Is the pair stable? Is the volume real? Is the team gone?
Most people think liquidity pools are passive income machines. They’re not. They’re high-risk tools that only make sense if you understand the trade-offs. The posts below show you exactly where this risk bites hardest—like with the collapsed Serum Swap, the ghostly KongSwap, or the fake airdrops tied to dead tokens. You’ll see how some users lost everything because they didn’t know what impermanent loss really meant. Others got burned by pools with zero trading activity, where the only thing moving was the price of the scam token. This isn’t theory. It’s what happened. And if you’re thinking about adding liquidity, you need to see it first.
Impermanent loss calculators help DeFi users understand the hidden risks of providing liquidity to crypto pools. Learn how they work, which tools are most accurate, and how to avoid costly mistakes.
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