What are impermanent loss & slippage?

Impermanent loss (IL) remains a perplexing notion for novices, yet it holds significant importance. As a liquidity provider on any DEX, you'll inevitably encounter it.

IL represents a missed opportunity. It delineates the variance between the value of your funds in a liquidity pool and the value those same tokens would retain had you simply held them in your wallet without depositing them into a pool.

Slippage denotes the price fluctuation occurring between the confirmation and execution of a swap.

This fluctuation arises because blockchain transactions first join a mempool (a queue) alongside numerous others, and their execution order is not necessarily sequential. Validators often prioritize transactions offering higher gas fees (refer to Swapping Fees). Thus, there is a chance that another swap for the same pair will precede yours, altering the price. Consequently, your swap might execute at a price differing from the initially calculated one.

The default slippage on QuantoSwap stands at 0.25% with a deadline of 25 minutes. For instance, if the price estimate suggests 100 USDT per token, and the price shifts to 100.25 USDT (or 99.75, as slippage operates bidirectionally), the swap will proceed. However, if the price escalates to 100.50 and fails to revert to 100.25 or lower within 25 minutes, it won't.

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