Risks

Impermanent Loss Risk

Providing liquidity in Automated Market Makers (AMMs) exposes users to Impermanent Loss (IL) risk, the risk that pool assets lose value due to rebalancing from price changes. Therefore, liquidity providers are short volatility and are betting that the yield will compensate them for their IL risk.

Impermanent loss in GammaSwap is the same as other full range constant product AMMs (Uniswap V2) and can be calculated here.

Utilization Risk

The available liquidity to withdraw at any single point in time is the TVL minus the Open Interest. If you're trying to withdraw more than this difference, you will have to wait until traders close their positions. This risk is the same across all lending markets.

Smart Contract Risk

Interacting with any smart contract carries the risk of losing access to your funds given they are open source and immutable.