> For the complete documentation index, see [llms.txt](https://docs.communityfinance.io/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.communityfinance.io/limitations-on-current-stable-swap-protocols/impermanent-loss.md). # Impermanent Loss Existing Automated Market Makers (AMM), such as Uniswap and Curve, require liquidity providers to provide liquidity of tokens in pairs or in a bundle prepared to swap within the provided liquidity pool. As a consequence, the liquidity providers may suffer from impermanent loss. In the context of a stableswap, this will mean that the liquidity provider may get back assets as a combination of tokens that are different from what they have provided initially. Impermanent loss happens when you provide liquidity to a liquidity pool, and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less value at the time of withdrawal than at the time of deposit. It's impermanent because you only materialize the loss when you withdraw from the pool. You can remain in the pool until the asset prices recover to the initial position of your entry, but this might never occur. Even though stablecoins (or different wrapped versions of a coin) will stay in a relatively contained price range, you are still subjected to a certain risk of impermanent loss in case one of the stablecoins loses its peg. **Community Market is designed to limit impermanent loss risk for liquidity providers.** --- # Agent Instructions This documentation is published with GitBook. GitBook is the documentation platform designed so that both humans and AI agents can read, navigate, and reason over technical content effectively. Learn more at gitbook.com. ## Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter, and the optional `goal` query parameter: ``` GET https://docs.communityfinance.io/limitations-on-current-stable-swap-protocols/impermanent-loss.md?ask=&goal= ``` `ask` is the immediate question: it should be specific, self-contained, and written in natural language. `goal` is optional and describes the broader end goal you are ultimately trying to accomplish on behalf of the user. GitBook uses it to tailor the answer towards what is most useful for that goal. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.