So I found a almost empty pool less than 1$ on orca.so , I wanna invest in
Its a usdc/token pool. Current price is lower than market.
What will happen if I add liquidity? Will my deposit be sold at a discount since pool price is so low? Or will it adjust?
I dont wanna get rekt somehow
4 thoughts on “Deposit concetrated liquidity in “empty” pool”
You risk to lose a lot in IL
Assuming it’s a constant product LP, if you add liquidity you are staking tokens in at whatever ratio is currently in the pool, which expands it without changing the exchange prices. Multiply the current volume of the two assets to get the product. Every time one asset is bought, it requires payment of the other asset to keep the ratio equal to that starting number. If you stake (aka buy LP tokens) and then people buy the cheap token, you would unstake with fewer of those tokens and more USDC.
(I’m tired atm so someone should double check my logic, but I think you would eat the impermanent loss as the LP investor here…you would buy tokens at market rate, then sell them in the pool at a lower price)
Buy from the pool until the price is the entry point you want, then LP. Shouldn’t cost more than a few cents to move the price w empty liq