When providing concentrated liquidity in decentralized finance, participants take on gamma risk, which represents their cost of volatility; this gamma risk is equivalent to impermanent loss, and the fees earned serve as compensation for bearing this risk.
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Is liquidity mining actually worth the risk? Uncovering the hidden truth.Added:
So, when you provide concentrated liquidity, you have you take on gamma risk. That's your your cost of volatility, your gamma is your impermanent loss. So, you take on that impermanent loss risk, and your reward, your compensation for taking on that gamma risk, is your fee.
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