I’ve pooled some tokens in Uniswap. Now let’s say I pooled x ETH and y SWAP in the ETH-SWAP pool. But when I check my pools I see that the pooled amounts of both ETH and SWAP is changing all the time. Why is that so?
Here is the actual diagram of the Uniswap documents.
Remember that at the time of swapping between two tokens, the DEX goes to the corresponding pool and from there it takes the tokens that the user is requesting and deposits those that it is delivering in exchange for the swap.
Therefore, it is important that the person who is exchanging tokens takes into account the Slippage, and the LP the impermanent loss
Ok, but it seams a bit weird to me that if I provide 1 ETH, the next time I check I got 0.98 ETH. Why do I loose when I provide liquidity? Ok, I know I get a share of the fees, but I don’t understand why the pooled tokens doesn’t stay the same.
Btw, are my shares of fees payed to me in pool tokens?
I think this Uniswap document can help you with the query
Thanks! That was really helpful.
So to put it simply: LPs loose with every change in price, not considering the fees. The fees, however, is meant to compensate these losses, through the increased value of the pool tokens.