Feb 22 • 29M

EP 25: Calculating 2 Risks in DEX, Price Slippage and Impermanent Loss

 
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Lisa JY Tan
We talk about the design of economic systems. This could be video game simulated economy or real business world like frequent flyer points system or blockchain based token economy.
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Decentralized exchanges (DEXes) have become increasingly popular in the cryptocurrency industry due to their lower fees and increased security. However, with the rise of DEXes comes the need for traders and liquidity providers to understand the risks involved, particularly when it comes to using automated market makers (AMMs).

In this episode, we'll take a closer look at the risks associated with AMMs, including impermanent loss and price slippage, and provide insights on how to calculate these risks accurately. So if you're looking to get smart about DEXes and AMMs, keep reading to learn how to define the risks using math, instead of relying on random excel sheets to calculate.

Watch on YouTube for visual learners and Substack for those who prefer reading.

Want more in-depth content? Join our Token Economics 201 course at www.academy.economics.design!

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