[Music] 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 you