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welcome back to the world of cryptos and
welcome back to the crypto corner
i hope you had a fantastic week and as
you know
there's always something exciting
happening in crypto so let's take a look
into it
the market has recovered a little bit um
it's not at the 400
billion us dollar we had almost two
weeks ago
before the correction but it's
recovering nicely and as you can see
we see a lot of green in
in the market cap but if we start after
our seven days
we see the usual picture d5 d5 d5
d5 and so on and so on and if we sort
and by the negative
it's similar also d5 d5 d5
and so we get a lot of questions in
regards to d5
as one can imagine and i'd like to dive
a little bit into
how to be safe when investing in this
famous yield farming
market so let's take a look into that
you probably saw this tool here from me
last time we spoke about this here
yieldfarmingtools.com
which lists not all of them but some of
those uh
yield farming opportunities that are out
there and i explained in the last video
why an apr of 889 is possible
and if you click on this
option here then you see that the smart
contract
risk level is high and the impermanent
loss level is high
and so i explained to you that smart
contract that's something that you can
check by going into defysafety.com
that will explain to you which protocol
is safe and which one isn't
so if it's something in red i would
definitely not touch that
if it's green then yes it has been
audited and it's
probably safe the other thing
is the impermanent loss and to explain
how that one works
because everybody has got a question
what is impermanent loss just those two
words are really weird anyway
so if we look at the traditional market
yeah like here i pulled up binance
uh with exam and bdc uh
then you see here that you've got the
order book people want to sell and
people that want to buy
and in the middle somewhere they find
the
mutual prices acceptable but you've got
people that
have got different price views and
they're just willing to wait or not wait
and that's not the case in protocols
like uniswap
as you probably saw in uni swap you
don't have an order book
and the way that that's set up is
explained through this chart here
so at the beginning when you build up a
pool in uniswap
you decide how many ethereum and in this
case how many die you're putting into
the pool
and that's the ratio that's fixed and so
of course the prices are changing and if
the prices are changing a little bit
it's no problem but if the prices are
changing a lot it is a problem and
that's called impermanent loss
and what i've done here for you is um
i set up a calculation as an excel
spreadsheet
so you can see here for example when we
have got a protocol ethereum and sushi
um i also a pool we provide liquidity
for pool
ethereum and sushi the price when we
open that pool is 386
and the sushi price is 504
and today the price went down a little
bit
in ethereum it's now 375.65
and sushi are left here at 504 so the
impairment loss is about zero percent in
other words
you have not lost any of your money but
if this price changes significantly then
at the moment
it's our it's around three dollars then
there's an impermanent loss of 2.9
percent so you lost 2.9 percent of your
assets in this in this case if we
make that difference bigger so let's say
say
that this is not three this is uh
zero point uh four
then you see you lost 47.2 percent it's
not
that you lost the sushi part of your
portfolio because remember
there's always this balance you lost
47 of your whole pool so the good
money that in this case is theorem that
stayed stable
you lost 47 of that one too and that's
the risk that you're carrying here
and that's a problem with all these d5
protocols like here moon which is
another similar to sushi you have got an
apy
of three thousand percent sounds
fantastic but have you checked the
the moon price yeah so let's do that we
if we go into here and
say moon then you'll see the risk that
you're carrying by just
investing in this pool yeah so let's go
14 days
so at one stage it was 12 and now it's
around 2.90
so you will have lost significantly
amount whether it's go up or down
doesn't matter it's always the
relationship
the relation that is important so you
will have lost a lot of money by
investing in this pool and that's
exactly the risk that you're carrying
which is called impermanent loss
yeah so that's where you have to be
really careful you have to check if you
invest in one of those
crazy pools you have to be really on top
of that and check it every hour
even during the night that the price
doesn't change because you know
in cryptos those prices can change in a
second
so i hope you understood what um
impermanent loss is
and how risky that is if you invest in
these coins and they all are risky so
there is not one
where you can say that this is a safe
bet and you'll get your 199 percent
just do the calculation this formula
that i had here
in this spreadsheet is is available
and if not just send us an email and
we'll send
the spreadsheet to you but anyway
so that's it from me this week again i
hope you enjoyed it i hope you learned
something
this is the solution to the impermanent
loss or the answer to the question
what's impermanent loss
and uh yeah i wish you a fantastic week
and thank you very much for watching and
i'm looking forward to see you next week
again thank you bye bye
thanks so much robert now if you're
watching we are not giving financial
advice
this is uh educational purposes on how
the cryptocurrency market works
and things that you need to know and
different uh tips and tricks
uh you know as we've always said in the
past you know and as robert has said
you know only invest what you're willing
to lose because the market is very
volatile
it's always on and things can change in
a heartbeat so again we're not giving
financial advice
it's just uh more so education for you
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you