Providing liquidity isn't a savings product. Fees are variable, historical figures don't predict future income, and you can lose money.
- Impermanent loss
- As the price moves, a position gradually swaps into the token that is falling. Its value can end up below simply holding the two tokens, and fees may not make up the difference.
- Range risk
- A position only earns fees while the price is inside its range. Outside it, the position sits entirely in one token and earns nothing until the price returns or you reposition.
- Issuer risk
- The asset is a token issued by a third party. The issuer can freeze, pause or move tokens, and holders rely on the issuer to honour its terms. Liquidity positions are exposed to this like any holder.
- Tracking risk
- The pool trades independently of the underlying market. Its price can sit above or below the reference price, especially when the underlying market is closed.
- Liquidity risk
- Thin pools can move sharply on single trades, and fee income depends entirely on trading activity, which can fall.
- Smart-contract risk
- Positions live in the venue's onchain program. Bugs, exploits or outages there can cause losses GridFi cannot reverse.
- Volatility
- Movements in the underlying asset flow straight into the position's value. Private-market and single-stock tokens can reprice abruptly.
GridFi