Welcome to Blockchain Trends, your guide to navigating the revolutionary world of blockchain technology. Forget just cryptocurrencies; we delve into the real-world applications shaping our future. Are you ready to unlock the secrets of decentralized finance? This week, we're diving deep into Advanced DeFi Strategies, specifically addressing the crucial topic of Impermanent Loss AMM strategies. Understanding this risk is paramount to navigating liquidity pools effectively. Intrigued? Let's explore how to mitigate impermanent loss and maximize your returns in the evolving landscape of Automated Market Makers!

Liquidity Pool Risks: Impermanent Loss and Beyond in AMMs

Understanding Impermanent Loss in AMMs: A Deep Dive

What is Impermanent Loss (IL) in Automated Market Makers?

Impermanent Loss (IL) is a unique risk inherent to providing liquidity in Automated Market Makers (AMMs). It arises when the price of tokens deposited in a liquidity pool diverges, compared to simply holding those tokens outside of the pool. Specifically, impermanent loss happens because AMMs like Uniswap, SushiSwap, and Balancer use a mathematical formula to maintain a constant product of the tokens within the pool. This formula, often x * y = k, where x and y are the quantities of two tokens and k is a constant, automatically rebalances the pool composition as prices fluctuate.

Imagine you deposit an equal value of two tokens, say ETH and DAI, into a liquidity pool. If the price of ETH increases relative to DAI, the AMM mechanism will sell some of your ETH and buy DAI to maintain the constant product formula. This rebalancing action is what creates impermanent loss.

The term "impermanent" refers to the fact that if the token prices return to their original ratio at the time of deposit, the loss can be recovered. However, in the volatile world of crypto, prices rarely revert precisely, and losses often become realized when liquidity providers (LPs) withdraw their funds. Understanding impermanent loss is crucial for anyone participating in DeFi yield farming and providing liquidity to AMMs, as it directly impacts the profitability of these activities.

How Impermanent Loss Occurs: Price Divergence and Arbitrage

Impermanent loss is fundamentally driven by price divergence between the assets in a liquidity pool and external markets. When the price of one token in a pool increases outside of the AMM, arbitrageurs step in to profit from this price difference. They buy the cheaper token from external exchanges and sell it in the AMM pool (where it's relatively more expensive) until the prices are roughly aligned across different trading venues. This arbitrage process is essential for keeping AMM prices in line with the broader market, but it's also the mechanism that triggers impermanent loss for liquidity providers.

Let's consider a pool with ETH and USDT. Suppose ETH's price rises by 20% on centralized exchanges. Arbitrageurs will buy ETH from exchanges like Binance or Coinbase and sell it on the AMM pool, say Uniswap, for USDT.

This action increases the supply of ETH and decreases the supply of USDT in the pool, adjusting the ratio and bringing the AMM price closer to the external market price. However, because the AMM is always rebalancing to maintain the constant product, liquidity providers end up holding fewer of the appreciating asset (ETH) and more of the depreciating asset (USDT) than if they had simply held the initial tokens outside the pool.

The difference in value between holding and providing liquidity is the impermanent loss. This loss is "impermanent" as it's only unrealized until the LP withdraws their funds; if prices revert to their deposit ratio before withdrawal, the loss can diminish or disappear.

Factors Influencing Impermanent Loss Magnitude

Several factors influence the magnitude of impermanent loss in AMMs. The most significant is the degree of price divergence between the tokens in the pool. Larger price swings result in greater impermanent loss. For instance, if one token's price doubles while the other remains stable, the impermanent loss will be more substantial than if the price changes are minor, say 5% or 10%. Highly volatile assets are therefore generally associated with higher impermanent loss risk when paired in liquidity pools.

Another critical factor is the pool composition. Pools with stablecoins paired together, such as USDT/USDC, tend to experience minimal impermanent loss because the prices of stablecoins are designed to remain pegged to a fiat currency, typically the US dollar. Conversely, pools consisting of two volatile assets, like ETH/BTC or two emerging altcoins, are more susceptible to significant impermanent loss due to the inherent price fluctuations of both assets.

Furthermore, the timeframe over which price divergence occurs also matters. Rapid and sharp price changes can lead to more pronounced impermanent loss compared to gradual price movements over a longer period. Liquidity providers must consider these factors and carefully choose pools that align with their risk tolerance and investment strategy when participating in AMMs.

Beyond Impermanent Loss: Other Liquidity Pool Risks

Smart Contract Risks in DeFi Liquidity Pools

Beyond impermanent loss, DeFi liquidity pools are exposed to smart contract risks, which are inherent to the underlying technology. Smart contracts are the self-executing code that governs AMMs and liquidity pools. These contracts, while designed to automate and decentralize financial operations, are still susceptible to vulnerabilities and exploits. The immutability of smart contracts, once deployed on the blockchain, means that any flaws or bugs present in the code are often permanent and can be exploited by malicious actors.

Code Vulnerabilities and Exploits

Code vulnerabilities in smart contracts can take various forms, including reentrancy attacks, integer overflows/underflows, and logic errors. Reentrancy attacks, famously exploited in the 2016 DAO hack, involve attackers recursively calling a function within a smart contract before the initial function call has completed, allowing them to drain funds. Integer overflows or underflows can occur when arithmetic operations exceed the maximum or minimum value that a data type can hold, leading to unexpected behavior and potential exploits.

Logic errors are flaws in the intended design or implementation of the contract's functionality, which can be subtle and difficult to detect during audits but can have devastating consequences if exploited. For example, in 2021, the BadgerDAO hack resulted in approximately $120 million in losses due to a compromised smart contract vulnerability. This incident highlighted the ongoing risks associated with smart contract security in DeFi, even in protocols that have undergone audits.

Mitigation Strategies for Smart Contract Risks

Mitigating smart contract risks requires a multi-faceted approach. Rigorous auditing by reputable security firms is paramount before deploying any smart contract. Audits involve a thorough review of the code to identify potential vulnerabilities and logic flaws.

However, even audited contracts can have undiscovered vulnerabilities, so formal verification, a more mathematically rigorous approach to proving contract correctness, is gaining traction. Bug bounty programs incentivize white-hat hackers to find and report vulnerabilities, contributing to the ongoing security of protocols. Implementing best practices in smart contract development, such as writing modular and well-documented code, using secure coding patterns, and limiting contract complexity, is also crucial.

Furthermore, monitoring smart contract activity for anomalous behavior and having emergency mechanisms to pause or halt contract execution in case of a detected exploit can limit potential damage. Finally, insurance protocols specifically designed for smart contract risks are emerging in DeFi, offering a layer of financial protection for users against unforeseen exploits.

Oracle Manipulation and its Impact on AMMs

Oracle manipulation poses another significant risk to AMMs. Oracles are external data feeds that provide real-world information, such as asset prices, to smart contracts on the blockchain. AMMs rely on oracles to accurately reflect market prices and execute trades at fair values. However, if oracles are compromised or manipulated, it can lead to severe consequences for AMMs and liquidity providers. A malicious actor could potentially manipulate an oracle to report an incorrect price, causing the AMM to execute trades at unfavorable rates, allowing the attacker to profit at the expense of liquidity providers.

For example, imagine an attacker manipulates the oracle price of ETH in an ETH/USDT pool on an AMM, making it artificially low. The attacker could then buy ETH at this artificially low price within the AMM pool, while the actual market price is significantly higher. When the AMM uses the manipulated oracle price to rebalance the pool, liquidity providers could suffer losses as their assets are traded at incorrect valuations. Several high-profile DeFi exploits have involved oracle manipulation, demonstrating the real-world impact of this risk.

Protocols are increasingly adopting decentralized oracles and multiple oracle sources to mitigate this risk. Decentralized oracles distribute the data feed across multiple nodes, making it more difficult for a single entity to manipulate the price. Using multiple oracle sources and aggregating data from various reputable providers can also enhance the reliability and accuracy of price feeds, reducing the attack surface for oracle manipulation.

Governance Risks in Decentralized Liquidity Pools

Governance risks are inherent in decentralized liquidity pools, particularly those governed by Decentralized Autonomous Organizations (DAOs). While decentralization aims to enhance security and community control, it also introduces new risks related to governance processes and decision-making. Governance vulnerabilities can arise from flaws in the governance mechanisms themselves, such as voting power concentration, malicious proposals, or slow decision-making processes that hinder the protocol's ability to respond to emerging threats or market changes.

For instance, if a small group of token holders controls a majority of the voting power in a DAO, they could potentially collude to pass malicious proposals that benefit themselves at the expense of other users or liquidity providers. This could include proposals to drain funds from the protocol, alter contract parameters in a harmful way, or rug pull the project entirely.

Furthermore, inefficient governance processes can delay critical upgrades or security patches, leaving the protocol vulnerable to exploits for extended periods. Protocols are exploring various governance models to mitigate these risks, including quadratic voting, which aims to reduce the influence of large token holders, time-lock mechanisms that delay the execution of governance proposals, and delegated governance, where users can delegate their voting power to trusted representatives.

Transparent and robust governance processes, coupled with active community participation, are crucial for mitigating governance risks and ensuring the long-term security and sustainability of decentralized liquidity pools.

Regulatory Risks and Compliance

Regulatory risks and compliance represent an evolving and significant challenge for DeFi liquidity pools. The regulatory landscape for cryptocurrencies and DeFi is still developing globally, and the lack of clear and consistent regulations creates uncertainty and potential risks for AMMs and their users. Governments and regulatory bodies worldwide are increasingly scrutinizing DeFi activities, including liquidity pools, due to concerns about money laundering, illicit financing, and investor protection.

The lack of regulatory clarity can lead to several risks. Firstly, regulatory crackdowns or sudden policy changes could disrupt the operations of AMMs or even render them illegal in certain jurisdictions. Secondly, compliance costs associated with adhering to evolving regulations can be substantial, particularly for projects aiming for wider adoption. AMMs may need to implement Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures to comply with financial regulations, which can impact decentralization and user privacy.

Furthermore, cross-border regulatory inconsistencies create complexities for DeFi protocols operating globally. Navigating these regulatory risks requires DeFi projects to proactively engage with regulators, adopt best practices for compliance, and adapt to the evolving regulatory landscape. The future of DeFi liquidity pools will significantly depend on how effectively the industry addresses regulatory concerns and establishes a sustainable path for compliance and responsible innovation.

Quantifying and Managing Impermanent Loss

Impermanent Loss Calculation Methods: A Practical Guide

Quantifying impermanent loss (IL) is essential for liquidity providers to understand and manage this risk effectively. While there are online calculators available, understanding the underlying calculation method provides deeper insight. A simplified approach to calculate IL involves comparing the value of holding tokens in a pool versus holding them outside.

Let's assume you deposit equal values of two tokens, Token A and Token B, into a pool. Let's say initially, you deposit 1 ETH and 1000 DAI, and the price of ETH is $1000. So, your initial deposit value is $2000 (1 ETH * $1000 + 1000 DAI).

Now, suppose the price of ETH increases to $2000, while DAI remains at $1. Due to arbitrage, the pool will rebalance. Assuming a 50/50 pool ratio is maintained by value, you would now have roughly 0.707 ETH and 1414 DAI in the pool (approximately maintaining the same $2000 value, but with a different token ratio).

If you had simply held your initial 1 ETH and 1000 DAI, their value would now be $3000 (1 ETH * $2000 + 1000 DAI). The value of your tokens in the pool is still approximately $2000. The impermanent loss in this case is the difference in value: $3000 (holding) - $2000 (in pool) = $1000. Expressed as a percentage of the holding value, IL is ($1000/$3000) * 100% ≈ 33.33%.

This simplified calculation demonstrates the principle. More precise calculations take into account transaction fees earned and the exact constant product formula used by the AMM. Online IL calculators provide these more accurate results by inputting initial deposit amounts, current pool balances, and fees earned.

Strategies to Mitigate Impermanent Loss in AMMs

Several strategies can be employed to mitigate impermanent loss when providing liquidity in AMMs. These strategies range from choosing specific types of pools to employing more sophisticated hedging techniques.

Providing Liquidity in Stablecoin Pairs

One of the most straightforward strategies to minimize impermanent loss is to provide liquidity in pools consisting of stablecoin pairs. Stablecoins, such as USDT, USDC, and DAI, are designed to maintain a stable value pegged to a fiat currency, typically the US dollar. When two stablecoins are paired in a liquidity pool, the price divergence between them is expected to be minimal, as their values should ideally remain close to $1.

Consequently, impermanent loss is significantly reduced in stablecoin pools compared to pools with volatile assets. While stablecoin pairs offer lower risk of IL, they also typically offer lower yields compared to pools with volatile assets, reflecting the lower risk profile. This strategy is suitable for liquidity providers who prioritize capital preservation and are willing to accept lower returns in exchange for reduced risk.

Hedging Impermanent Loss with Derivatives

For liquidity providers seeking higher yields but wanting to manage impermanent loss risk, hedging strategies using derivatives can be employed. This approach involves using futures contracts or options to offset potential losses from price divergence. For example, if you are providing liquidity in an ETH/DAI pool and are concerned about ETH price volatility, you could short ETH futures contracts on a derivatives exchange.

If the price of ETH drops, the losses in the liquidity pool due to impermanent loss may be partially or fully offset by the profits from your short ETH futures position. Similarly, options contracts can be used to create more complex hedging strategies.

Hedging with derivatives requires a deeper understanding of financial markets and derivatives trading, and it introduces additional costs, such as trading fees and margin requirements. However, for sophisticated liquidity providers, hedging can be an effective tool to manage impermanent loss risk and potentially enhance overall returns.

Fee Tier Selection and its Impact on IL

In some AMMs, like Uniswap V3, liquidity providers can choose different fee tiers when creating or contributing to a pool. Fee tiers determine the percentage of trading fees earned by liquidity providers on each trade. Higher fee tiers, such as 0.3% or 1%, are typically associated with more volatile pairs or less liquid markets, as they compensate LPs for the increased risk of impermanent loss and price slippage. Lower fee tiers, like 0.05% or 0.1%, are common for stablecoin pairs or highly liquid markets where impermanent loss and volatility are lower.

Selecting the appropriate fee tier can impact the overall profitability of liquidity providing, considering both impermanent loss and fee earnings. While higher fee tiers can help offset impermanent loss during periods of high volatility and trading volume, they may also reduce trading activity if fees are too high, potentially lowering overall fee earnings.

Conversely, lower fee tiers attract more traders due to lower costs, but may provide less compensation for impermanent loss risk. Liquidity providers should carefully consider the volatility of the asset pair, expected trading volume, and their risk tolerance when choosing a fee tier to optimize their returns and manage impermanent loss effectively.

Advanced AMM Strategies and Impermanent Loss Mitigation

Concentrated Liquidity and its Effect on Impermanent Loss

Concentrated liquidity, introduced by Uniswap V3, represents a significant advancement in AMM design and offers a powerful tool for impermanent loss mitigation. Traditional AMMs, like Uniswap V2, distribute liquidity evenly across the entire price range from zero to infinity. Concentrated liquidity allows liquidity providers to allocate their capital within a specific price range they expect trading to occur. By concentrating liquidity within a narrower range, LPs can earn significantly higher trading fees with the same amount of capital compared to V2, as their capital is utilized more efficiently within the active trading range.

However, concentrated liquidity also introduces a new dimension to impermanent loss management. If the price moves outside the chosen range, the LP's liquidity becomes inactive, and they stop earning fees until the price returns to the specified range. Furthermore, if the price moves significantly within the chosen range, impermanent loss can be amplified compared to V2 for the same price movement, because the LP's capital is more concentrated.

Therefore, while concentrated liquidity offers the potential for higher returns and greater capital efficiency, it requires more active management and a deeper understanding of price ranges and volatility. Liquidity providers need to carefully choose their price ranges based on market analysis and adjust them dynamically to optimize fee earnings and manage impermanent loss within the context of concentrated liquidity AMMs.

Active Liquidity Management Techniques

Active liquidity management becomes crucial when using concentrated liquidity AMMs like Uniswap V3. Simply providing liquidity and forgetting about it can lead to suboptimal returns or even losses if the price moves outside the chosen range or impermanent loss becomes significant. Active management involves continuously monitoring the price of the assets in the pool and adjusting the liquidity range dynamically to remain within the active trading range and maximize fee earnings.

This can involve manually adjusting the price range based on market analysis or using automated tools and strategies. Some protocols and platforms offer liquidity management bots that automatically rebalance and adjust liquidity ranges based on predefined parameters or market conditions. These bots can help automate the active management process and optimize returns, but they also introduce smart contract risks and require careful configuration and monitoring.

Active liquidity management strategies can range from simple range adjustments to more complex techniques like range orders, which allow LPs to automatically shift their liquidity to different price ranges as prices move, mimicking limit orders and potentially capturing more trading fees. Effective active liquidity management is key to maximizing the benefits of concentrated liquidity and mitigating impermanent loss in advanced AMM designs.

Impermanent Loss Insurance Protocols

Impermanent loss insurance protocols are emerging as a dedicated solution to directly address impermanent loss risk. These protocols aim to provide financial protection to liquidity providers against potential losses incurred due to impermanent loss. Typically, these insurance protocols operate by allowing LPs to purchase insurance coverage for their liquidity positions. If impermanent loss occurs, the insurance protocol compensates the LP for a portion or the entirety of the loss, depending on the coverage terms.

These insurance mechanisms can vary. Some protocols might use pooled insurance funds, where premiums from LPs are pooled together to cover potential claims. Others might utilize algorithmic insurance models that dynamically price premiums and payouts based on risk assessments.

Impermanent loss insurance is still a relatively nascent area in DeFi, and the effectiveness and reliability of these protocols are still being tested in real-world scenarios. Factors to consider when evaluating impermanent loss insurance protocols include the coverage terms, premium costs, claim settlement processes, and the underlying risk assessment models. As the DeFi space matures, impermanent loss insurance could become an increasingly important tool for mitigating risk and encouraging wider participation in liquidity provision.

Comparing Different AMM Designs and their Risk Profiles

Uniswap vs. Curve vs. Balancer: A Risk Comparison

Different AMM designs exhibit varying risk profiles, particularly concerning impermanent loss and other associated risks. Comparing Uniswap, Curve, and Balancer highlights these differences. Uniswap, particularly V2, is known for its simplicity and general-purpose design, suitable for a wide range of token pairs. Its constant product formula (x*y=k) is straightforward, but it can lead to significant impermanent loss for volatile pairs. Uniswap V3, with concentrated liquidity, offers potentially higher returns but amplifies IL risk if not managed actively.

Curve prioritizes low IL for stable assets, Uniswap offers versatility but higher IL risk (especially V2, and V3 if unmanaged), and Balancer provides flexibility with potentially mitigated IL for diversified portfolios.

Assessing Impermanent Loss Across Various AMM Platforms

Assessing impermanent loss across various AMM platforms requires considering not only the AMM design but also the specific pool characteristics and market conditions. While Curve is generally expected to have lower IL for stablecoin pairs compared to Uniswap, the actual IL experienced can vary based on factors like pool liquidity, trading volume, and price volatility during the liquidity provision period. For volatile asset pairs, Uniswap V2 and Balancer may exhibit similar levels of impermanent loss under comparable market conditions, while Uniswap V3's IL can be higher or lower depending on the liquidity range chosen and active management strategies employed.

Platforms like SushiSwap, a fork of Uniswap, generally share a similar risk profile to Uniswap V2 in terms of impermanent loss, given their similar AMM design. Platforms utilizing order book-based AMMs or hybrid models may have different impermanent loss characteristics compared to constant function AMMs like Uniswap and Curve. Furthermore, the specific tokens paired in a pool significantly impact IL risk, regardless of the platform.

Pools with highly volatile altcoins will inherently carry higher IL risk across most AMM platforms compared to pools with stablecoins or more established cryptocurrencies. Liquidity providers should therefore analyze the specific pool composition, historical volatility, and AMM design when assessing impermanent loss risk across different platforms, rather than relying solely on generalizations about platform-level risk profiles.

The Future of Impermanent Loss Mitigation in DeFi

Novel Approaches to Reduce IL

The DeFi space is actively exploring novel approaches to further reduce impermanent loss and enhance the sustainability of AMMs. One promising area is dynamic fee mechanisms that adjust trading fees based on market volatility or impermanent loss levels. For instance, fees could automatically increase during periods of high volatility to compensate LPs for increased IL risk, and decrease during stable periods to attract more traders.

Proactive liquidity management protocols are being developed to automatically rebalance pool compositions or adjust liquidity ranges to minimize IL. These protocols could utilize advanced algorithms and machine learning to predict price movements and optimize LP positions.

Another approach involves hybrid AMM designs that combine the strengths of different AMM models. For example, combining the stableSwap invariant of Curve with the general-purpose functionality of Uniswap within a single platform could offer optimized trading and liquidity provision for both stable and volatile assets.

Layer-2 scaling solutions and cross-chain AMMs are also being explored to reduce transaction costs and improve the efficiency of AMMs, which indirectly contributes to mitigating IL by enhancing overall capital efficiency. Research into alternative invariant formulas beyond the constant product formula is ongoing, aiming to design AMMs that are inherently less susceptible to impermanent loss while maintaining desirable trading properties.

The Evolution of AMM Designs and Risk Management

The evolution of AMM designs is continuously shaping the landscape of risk management in DeFi. From the initial simple constant product AMMs to the more sophisticated concentrated liquidity models and hybrid designs, innovation is driving towards greater capital efficiency, lower slippage, and improved impermanent loss mitigation. The introduction of smart order routing across multiple AMMs aggregates liquidity and potentially reduces the impact of price divergence on individual pools, indirectly mitigating IL at a portfolio level. The development of impermanent loss insurance and hedging strategies provides direct financial tools for managing IL risk.

Furthermore, risk assessment tools and analytics platforms are becoming more sophisticated, offering liquidity providers better insights into impermanent loss risks and potential returns across different pools and platforms. The increasing focus on formal verification and security audits of smart contracts enhances the overall security and reduces smart contract risks associated with AMMs.

As the DeFi ecosystem matures, a holistic approach to risk management is emerging, encompassing technological advancements in AMM designs, financial instruments for hedging and insurance, and improved analytical tools for informed decision-making. This evolution aims to create a more robust and sustainable environment for liquidity provision and DeFi participation, navigating the inherent risks of decentralized financial systems.

Conclusion: Navigating the Risks of Liquidity Pools in DeFi

Navigating the risks of liquidity pools in DeFi, particularly impermanent loss and beyond, requires a comprehensive understanding of AMM mechanics, risk factors, and mitigation strategies. Impermanent loss, while inherent to AMMs, can be quantified, managed, and even mitigated through strategic pool selection, hedging techniques, and active liquidity management. Beyond IL, smart contract risks, oracle manipulation, governance vulnerabilities, and regulatory uncertainty represent broader challenges that demand ongoing attention and proactive risk management.

The DeFi space is continuously innovating, with novel AMM designs, risk mitigation tools, and insurance protocols emerging to create a more secure and sustainable ecosystem. For participants in DeFi liquidity pools, informed decision-making, continuous learning, and a balanced approach to risk and reward are crucial for navigating this dynamic and evolving landscape effectively.

Final Reflection: Navigating the Tides of Decentralized Finance

The exploration of liquidity pool risks, particularly impermanent loss in AMMs, is not merely an academic exercise. It’s a crucial undertaking in today's rapidly evolving decentralized finance landscape, where individuals are increasingly empowered to participate in financial markets directly. Understanding these risks is paramount to fostering a sustainable and equitable ecosystem, preventing avoidable losses, and encouraging wider adoption of these innovative technologies.

The impact of impermanent loss extends far beyond individual investors; it shapes the very fabric of decentralized finance. The potential for significant losses, if not properly understood and mitigated, can erode trust in AMMs and hinder their long-term growth. The price of anything is the amount of life you exchange for it. - Henry David Thoreau. This quote resonates deeply when considering the time, effort, and capital individuals invest in liquidity pools, highlighting the importance of informed decision-making and risk management.

As you navigate the world of decentralized finance, remember that knowledge is your most powerful tool. Reflect on the strategies discussed, assess your own risk tolerance, and engage with the community to share insights and learn from others. The future of AMMs depends on informed participation and a collective commitment to mitigating the risks that lie beneath the surface. Embrace the challenge, and contribute to building a more resilient and accessible financial future for all.

Uncover Your Next DeFi Move!

Thanks for diving into the world of liquidity pool risks with us! We hope you now have a clearer understanding of impermanent loss and how to navigate the challenges of AMMs. It's time to put that knowledge into action.

• Assess your risk tolerance and choose liquidity pools wisely, considering factors like trading pair volatility and AMM fee structures. Remember, informed decisions are key!
• Explore advanced tools and analytics platforms that help you monitor and predict impermanent loss.
• Share this article with fellow DeFi enthusiasts and spark a discussion on best practices for mitigating liquidity pool risks in our community!

What strategies will you implement to protect yourself from impermanent loss when participating in AMMs?