Impermanent Losses

Impermanent loss happens when the automated market maker (AMM) rebalances the token pair in your LP due to price divergence between the two assets.

For example:

• You deposit $1,000 in APT and $1,000 in USDC into an LP

• APT’s price increases relative to USDC

• The pool rebalances and gives you less APT and more USDC

If you simply held APT and USDC outside the LP, you'd have more value. This difference is known as impermanent loss - and it's “impermanent” because the loss can disappear if prices return to their original ratio.