Why Most Liquidity Providers Lose Money (And How to Avoid It)
Many new users enter DeFi thinking that high APR equals high profit.
But in reality, one of the biggest risks in liquidity providing is something often ignored impermanent loss.
Impermanent loss happens when the price of tokens in a liquidity pool changes relative to when you deposited them. As prices move, your assets are automatically rebalanced, which can reduce your overall value compared to simply holding.
This is where strategy becomes important.
On STON.fi, users have access to tools like the impermanent loss calculator, which helps estimate potential outcomes before committing funds.
A smarter approach includes:
➫ Evaluating pool TVL for stability
➫ Choosing token pairs with lower volatility
➫ Calculating possible impermanent loss
➫ Avoiding blind APR chasing
Liquidity providing is not just about earning it’s about managing risk effectively.
The more informed your decisions are, the better your long-term results will be.