One of the sides/ pairs of liquidity pool goes to 0

Hey great to be here, I’m excited to keep using the BNB liquidity pool going forward.

I understand impermanent loss;

but what specifically happens when one side of my liquidity pool goes to 0.

For example At the start of the month I have

  • 50% in 1inch ~100 and 50% ~ 1BNB
  • The price of 1inch falls from 5$ to 0.5$ and our smart contract buys more 1inch with BNB
  • this ‘fills up’ the 1inch side of my pool by selling BNB
  • the balance of my BNB falls to 0 <<

What happens then ???

Do I have to then sell some of my 1inch to buy BNB realising a loss.

Thanks guys.

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Great question – would love for someone to answer this^^

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It’s simple . The Liquidity LP you provide has unchanging conditions. But both paired tokens have a price changing condition. It’s simple: suppose 1 inch/BNB, for example, when you withdraw LP tokens you deposited, if the price of 1 inch dropped by 1/10 falls, on the contrary, the volume of BNB would be 10 times higher to meet liquidity. It doesn’t hurt because LPs are of equal value when you deposit them.

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