Liquidity Pool worst case?

Hi everyone, I’m wondering what the worst is that could happen to a LP?

I know that smart contracts are deployed on 5he Blockchain itself and can be used even without the web-frontend in case it goes down.

But what could happen so that my LP tokens are completely lost or lose their value?

Can I always withdraw liquidity and regain the initial token pair even without the dex operating (e.g. trough the Blockchain explorer)?

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6 thoughts on “Liquidity Pool worst case?”

  1. There could be an exploit (or “feature”) that lets someone completely drain the liquidity pool. You would be stuck with you LP token that guarantees you a share of 0$.

  2. You can not only lose all your money should one of the tokens lose its value, you can also sign into a malicious contract that will steal all your weth tokens for instance. Be careful and always check dapps urls and even liquidity on contracts before entering

  3. You should be worried about 2 scenarios:

    1) Smart contract of DEX/AMM gets hacked and all your funds are gone
    2) Rug pull. You invested in a pool which contains a shady token paired with e.g. ETH. Then all ETH could be drained from this pool and with no more ETH incoming your investment will probably go to zero.

    You are never safe. All you can do is:

    – Check if the DEX/AMM has an audit
    – How much value is locked in the DEX/AMM (TVL)
    – How big is the pool
    – Do you know how the tokens work which are in the pool

  4. Thanks people. All your answers are really helpful!

    Edit: would it be possible to swap back LP tokens without Frontends? Assuming you use beefy for example. Could I regain my initial tokens without 8sing either beefy nor the underlying protocols Frontends?

    Getting way hypothetical here 😁

  5. Now searching for cool crypto investments with minimal risk. Do u know Optimus ? I’m considering an option of trying it as they say that a project gets the funding only after investors’ approval. Really??


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