Potential Losses

Impermanent loss is a concept associated with providing liquidity to automated market maker (AMM) platforms like Uniswap. When you supply funds to a liquidity pool, you're effectively providing tokens to facilitate trades, and in return, you earn a share of the trading fees. Impermanent loss occurs when the value of your assets in the pool diverges from what they would have been if you had just held onto those assets instead of providing liquidity.

This loss is termed "impermanent" because it's not a guaranteed or realized loss unless you withdraw your liquidity from the pool. It's a consequence of the changing price ratio between the tokens in the pool. When one token in the pair experiences significant price movement relative to the other, the pool's token ratio changes, and this can result in less value in the pool compared to simply holding onto your original tokens.

In Jungle, we don’t have impermanent loss but do have the position loss (Temporary Loss) which occurs when the total position value changes in an MM Pool, indicated by the CHG in LP token price. Due to the endogenous nature of risks involved with market making, there will always be some who win, and others who lose. Although we cannot make specific predictions before market making, we innovatively display and manage them through the pnl (profit and loss) of positions during market making. This is one of the factors that differentiates us from other decentralized perpetual competitors.