Liquidity provision risks

Impermanent loss

Impermanent loss is when the total dollar value of your deposited pair ends up below what you would have had by simply holding the two tokens. It happens because the AMM rebalances the pool as prices move: when the two tokens diverge, the pool ends up holding more of the one that fell and less of the one that rose.

It is smaller for correlated or stable pairs (a synthetic against its own collateral) and larger for volatile ones. Trading-fee and liquidity-mining income offset it, and in an active pool often more than offset it, but not always, and never guaranteed. Model expected fees against expected divergence before you commit.

Smart-contract risk

Pooled funds sit in the AMM and router contracts. A bug or an economic exploit can cause partial or total loss. None of TRANT's contracts have been audited yet. See Audits and the protocol-wide Risks page.

Other risks

• Losing your LP tokens: they are a bearer claim. Lose access to them and you lose the position and its accrued fees.
• Thin-market withdrawal: in stressed conditions a pool can be too shallow to withdraw from at a fair price; large exits move the price against you.