What happens when one of the LP coins…


What happens when one of the LP coins going down lets say 20% and the other one stays on the same price and 24 hours later Coin A comes back to the same price? How does this affect Coin B?


As far as I understand the LP tokens are always equal themselves out to keep the 50:50 ratio.

If coin A lose value doesn’t it “pull” from coin B to bring it in balance? If it does that than you lose coin value do you not?

Sorry for bad English… I hope you get what I’m trying to ask. ๐Ÿ™‚

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9 thoughts on “What happens when one of the LP coins…”

  1. If coin A comes back to the same price, then at that time, nothing’s changed. The value is still the same. If for example, coin A down 20%, and coin B up 10%, that means the value of your lp is down 5%. It’s in the middle of both coins.

  2. it always autobalances to a 50:50 ratio. the value still depend on the underlying tokens of the LP, if one or both of them goes down, your value goes down as well.

    so for example, you have an USDC/AVAX LP. you got 50% USDC, 50% AVAX. so if AVAX goes down in price, the market value of your LP will go down as well because of the AVAX component, but not so much, coz you are somehow hedge coz of the 50% USDC pair and vice versa when the price goes up.

    unless you are into a index type of pools like balancer or beethovenx where the allocation ratio is different than the standard 50:50.

  3. It equals in value you put in. But โ€œImpermanentโ€ Loss causes you to effectively have more of the unwanted coin, such that if one coin drops drastically or other moons, youโ€™d likely will have more $ if you held. See the site il.wtf

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