Arbitrum Blockchain Traders Protect Against Impermanent Loss

GammaSwap allows decentralized finance (DeFi) users to borrow liquidity provider (LP) tokens.

The prices of the tokens in the pool diverge from their starting ratio, the LP position loses value.

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The higher the volatility, the more the ratio between the prices of the tokens diverges.

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LP profits are inversely related under the existing AMM model, essentially “shorting” volatility.

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GammaSwap traders LP tokens – allowing them to take the opposite position of an AMM LP.

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LPs hedged against falling token prices, and should therefore increase liquidity across Arbitrum.

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A GammaSwap representative told CoinDesk that the team plans to deploy on more blockchains.

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BNB Chain and Ethereum, provide support for Uniswap LPs – which lock billions of dollars.

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