Provide Liquidity FAQ

1) I have a leveraged LP. Why is my collateral decreasing even though the price is going up?

With a leveraged LP, your exposure to price movements depends on which tokens you are borrowing. Generally speaking, you end up shorting the token you borrow the most and, as a result, longing the token you borrow the least. This effect is especially pronounced at high leverage.

As a result, if the price of the token you are borrowing rises significantly, the value of your debt increases faster than your collateral, leading to a reduction in your profit.

This is visible on the PnL chart at the top of the page.

In this example, the PnL chart shows that starting at $91.07, your collateral's profit begins to decrease.

2) My position had a balanced borrow mix, the price moved out of my range and I'm experiencing a loss. Why?

You've realized your impermanent loss. When borrowing a balanced mix of both tokens, your goal is to close the position as close as possible to your entry price, especially if the position was opened at the midpoint of your range: you're essentially shorting volatility.

The PnL chart highlights that the maximum loss within the range occurs at the edges. Once the price moves outside your range, you're no longer earning swap fees, meaning there's no yield to offset the impermanent loss.

Therefore, if the swap fees generated don't outweigh the impermanent loss, you end up with a net loss when you exit the position.

Further information on the "Neutral" Farming strategy can be found here.

3) Despite borrowing 100% USDC, effectively longing the paired token, my potential upside profit seems very small. Why is that?

Borrowing 100% USDC means you are shorting USDC and therefore longing the paired token. However, even with this setup, your upside can appear limited if your range is poorly positioned.

For this to work effectively, your initial deposit should be primarily composed of the token you are long on. This ensures that as its price increases, your position gradually converts it into USDC, effectively locking in gains as the price rises.

If your range is too wide or if your lower range bound is positioned too far below your entry price, your position may start off with too much USDC, limiting your exposure to the upside. For an optimal setup, position your lower bound close to your entry price while leaving room above for price appreciation.

Further information on the "Long" Farming strategy can be found here.

4) My PnL shows a profit, but when I try to withdraw, I end up with less SOL than I initially deposited. Why?

By default, PnL is shown in USD ($), meaning it reflects your performance relative to holding USDC in your wallet.

By clicking the “T” button, you can switch the PnL display to reflect performance in tokens, based on the token selected in the top header of the PnL chart (e.g., “PnL in SOL”). You can click on it to switch to the other token in the pair.

Example:

• You deposited 10 SOL when the price was $160 → total value = $1,600

• The price of SOL rises to $180, and your liquidity position is now worth $1,710

• In USD terms: $1,710 - $1,600 = $110, so your PnL in USD is +$110

• However, in SOL terms: $1,710 / $180 = 9.5 SOL, meaning you now hold 0.5 SOL less

• So your PnL in SOL is -0.5 SOL

Therefore, always refer to the PnL chart and select the appropriate view (base token or quote token) to understand your performance in the unit that matters to you.