technology hard mcq

Which DeFi risk arises from impermanent loss when providing liquidity to volatile trading pairs?

  1. Impermanent Loss
  2. Smart Contract Risk
  3. Oracle Manipulation
  4. All of these

Answer: Impermanent Loss

Impermanent loss occurs when token prices diverge, reducing value vs holding tokens. Critical risk for liquidity providers.

Topic Digital Currencies: DeFi
Exam Relevance Banking, UPSC, SSC

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