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Contributing to a liquidity pool enables liquidity providers to earn passive income while also supporting the continued growth of decentralized finance (DeFi) platforms that they’re passionate about. However, such contributions expose these liquidity providers to impermanent loss, which can occur when a token’s price shifts.
Efforts to adequately address this risk for liquidity providers have largely fallen flat, and have even worsened the problem in some cases. SmarDex is the latest DeFi project that promises to solve the problem of impermanent loss, and potentially even transform it into impermanent gain.
In this article, we’ll discover how SmarDex works. Key Takeaways:
The risk of impermanent loss is significant for liquidity providers, and hasn’t been properly addressed until recently.
SmarDex uses an advanced algorithm that minimizes impermanent losses while allowing for impermanent gains in the DeFi space.
SmarDex charges lower trading fees than usual AMMs, and offers four services in its platform: Swapping, liquidity provision, farming and staking.