Impermanent Loss
Impermanent Loss happens when the price of your tokens drop compared to when you deposited them. The larger the change is, the bigger the loss.
Impermanent Loss can be counteracted by trading fees if there is large enough trading volume in the pool.
Stable coins are less exposed to Impermanent Loss than other tokens.
Uniswap charges 0.3% on every trade that directly goes to liquidity providers.
Considerations:
- Protocol (Contract Logic)
- Specific Pool
- Deposited Assets
- Wider Market Conditions