Understanding PnL
What Actually Impacts Your PnL
Your actual returns from providing liquidity are a mix of three elements:
Swap Fees: Earned whenever trades route through your range.
Token Price Movement: Gains or losses from changes in the underlying assets.
Impermanent Loss: Cuts into your net return if prices drift apart.
When you provide liquidity, you’re not just holding tokens — you’re making a bet on their relative price. As those prices shift, the value of your position can diverge from simply holding the assets in your wallet. This divergence is called impermanent loss (IL).
It’s “impermanent” because it only becomes real when you close the position. If prices revert to where they were when you entered, the loss can disappear. If they don’t, the value gap is locked in on exit.
How to Minimize IL Risk
Wider ranges reduce exposure
By covering more price movement, your position stays active longer and buffers against IL. You’ll earn fewer fees per trade, but your risk is lower.
Use leverage with discipline
Lower leverage gives you more room to manage positions, survive volatility, and avoid forced liquidations.
Monitor and adapt
On Moar, smart LPs are active. Watch your range, your utilization, and your real-time PnL.
Choose Less Volatile Pairs
IL increases with price divergence. Stable pairs like USDC–USDT or tightly correlated assets tend to move in sync, reducing exposure to IL. These pairs are ideal for more passive LPs or conservative strategies.
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