If you were an ETH holder and participate in liquidity mining on uniswap pool of ETH-USDT, after a year, have you really earned much more ETHs? However, facts can be eye-popping. We counted the data for the whole year of 2021 and found that you not only did not make any ETHs, but lost 7.7% of initial ETH. Isn’t the result very surprising? So why does this happen?
Let’s analyze it in detail. In order to mine, you must swap half of ETH for USDT depositing into the pool as a LP. Here you are equivalent to selling half of the high-quality assets at the low point in the crazy bull market of 2021. The farming strategy allows you to bear the risk of price up or down, but also the risk of impermanent loss. In the end, you might as well choose to hold or ETH2. 0 staking compared to providing liquidity for AMM.It is ery scary that you were exposed to both impermanent loss risk and price upside or downside risk while providing liquiding for AMM. Therefore, single-sided liquidity mining is particularly important for every farmer. For example, if you choose to provide liquidity in X3, you will get 42.8% more of initial ETH by participating in AMM mining in 2021. It is an unique solution to hedge impermanent loss and may be an important breakthrough for AMM farming. I believe it will be one of the important trends of defi2.0.
https://x3finance.medium.com/how-much-is-a-real-profit-loss-for-an-originally-an-eth-holder-providing-liquidity-on-uniswap-164e352603be
