Impermanent Loss Protection
Among many other things, one interesting thing that excites me about Thorchain on a normie level is how it has decoded the solution to Impermanent loss.
Impermanent loss is like a plague to DeFi and I believe it has held back a lot of potential users, I don’t think anyone wants to loose their money to impermanent loss, I don’t, people shouldn’t.
Thorchain offers conditional Impermanent loss protection, with the condition on the basis that if you remain in the pool for 100days from the day of providing liquidity, any impermanent loss incurred will be paid back on the 100th day.
What this basically means is that there is an assurance based on Thorchains ingenious tokenomics that the liquidity provider should have broken even with all things being equal and through that tokenomics, the protocol is designed to reimburse all losses incurred all within the 100 days.
I find that quite revolutionary, I’ve been in the liquidity pool for over 100 days but I haven’t had to experience the impermanent loss protection in action because the was no impermanent loss incurred, although we understand that the chain was halted for a while. Thorchain is the only protocol that makes impermanent loss look like child’s play and a playground for stable coins.
The highest paying APY on a decentralized permissionless Liquidity platform with stable coin is on Thorchain and it is the BUSD offering 81% APY at the point of writing this post.
USDT is offering 72% APY and USDC is offering 61% APY. So the idea is that you enter the pool asymmetrically, supplying only one side of any of the stables you want, and earning yield on them, as long as you remain in the pool for 100 days your stables are safe and chances are that after those 100days you’d be so lovestruck that you just want to keep adding to your liquidity. It’s quite amazing.
Ofcourse the pool won’t be this juicy forever, I definitely can’t be the only one seeing this, and sorry not everyone can get in as much as they’ll want, the next #RaiseTheCaps on Nov 3rd will be the biggest so far, able to accommodate $100m, yet, still not big enough.
One thing is certain, I will be sitting in this platform for a very long time. Thorchain has been battle tested and has so many hands on deck, this is the Lift off, it’s up from here, and if it breaks we’ll do it all over again till we get it.
P.S
Bear in mind that Thorchain is still in chaosnet and chaos is still meant to be expected until Valhalla which is projected to be launched EOY, so thread with caution. Kindly do your own research this is NFA.
Check out the result of 60 days in the pool
Thanks for reading.