"Impermanent Loss and how yieldbasis makes it "zero" - Part I: A Simple Mathematica" - a new article by Mirador News

TL;DR: Impermanent loss (IL) isn’t a bug or bad timing—it’s a structural outcome of traditional AMMs (x·y = k). When prices move, AMMs auto-rebalance, causing LP positions to grow with √x while simply holding assets grows linearly, so LPs underperform HODL as volatility increases. Trading fees can sometimes offset IL in calm markets, but simulations show they often fail as price moves get larger. Yield Basis tackles IL at the root by maintaining a constant 2× leverage, effectively squaring the LP payoff and transforming returns from √x back to x. The result is LP exposure that tracks price 1:1 like holding the asset, while still earning trading fees. Part II will detail how Yield Basis sustains this leverage and rebalancing in practice.

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More coverage

• IMPERMANENT LOSS AND HOW YIELDBASIS MAKES IT “ZERO" (mirador.finance)
• Impermanent loss and Loss-vs-Rebalancing II - arXiv (arxiv.org)
• IMPERMANENT LOSS AND HOW YIELDBASIS MAKES IT “ZERO" (x.com)
• Impermanent Loss In Crypto: How To Calculate & Avoid It - Milk Road (milkroad.com)
• What Is Impermanent Loss? How It Works, and How to Avoid It (changelly.com)

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