Understanding Liquidity Pool Balancing, Arbitrage, Impermanent Loss

Hello all,

As a Provide user for about a year now, I’m looking to dip my toe in providing assets to the new pDex v3 LPs.

After reading threads here on Incognito and watching a handful of Youtube videos, I thought I had a decent idea of how AMMs and impermanent loss work…However, as I look at coin balances in the (for example) DAI/USDT and BTC/PRV pools from within Earn > Pools, they don’t have anywhere near equal USD value yet the exchange rates via the pDEX Swap tab shows values more in line with external markets–so there doesn’t seem to be a ‘corrective’ arbitrage opportunity. Are these not ‘50/50’ pools?

Last question. Any tools for tracking realized Impermanent loss that folks would recommend?

Anyway, thanks for any explanations folks want to share! Just trying to be more informed before I commit funds to any LPs.


One of the reasons is why the pDex v3 exists. i.e. decreasing slippage after the high volume trades.

May not be so because of the virtual liquidity concept.

pDex v3 is not a classical AMM with x * y = k formula. pDex v3 is an AMMOB with x * a * y * a = k formula and an orderbook. If we ignore the orderbook and set a = 1, then pDex v3 becomes a classical AMM.

Please read this (Introducing the new pDEX (pDEX v3)) for more details, especially the trade example in it.


Thanks for the reply @abduraman! I’ll have a read through that pDEX v3 doc again --clearly missed some stuff the first time around.

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