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Impermanent Loss Protection (ILP)
No other DEX offers Impermanent Loss Protection (ILP), making this a unique feature of DEFYSWAP. We have already explained what impermanent losses are, and how we incentivize liquidity providers, so that already minimal risk becomes even more insignificant. To remove this risk fully, we will offer ILP to every yield farmer. Our ILP system tracks your initial investment and the present value. When withdrawing liquidity, if the user suffers from Impermanent loss, the ILP fund will reimburse the loss so the user is fully compensated provided there is availability in the fund.
DefySwap possesses a unique protection format we lovingly refer to by the acronym ILP. Due to the fact that you don't encounter something like this very often, we wanted to ensure everyone has some idea on how things work regarding the protection as there are several requirements that allow your eligibility for the ILP fund.
Absolutely NO funds will be paid out to ANYONE in the event that attention was not paid to the rules below. There will be ZERO exceptions to this rule. You are expected to maintain your own investments and funds at ALL times and in the event of some kind of loss due to negligence on your part, we will be unable to assist.
Requirements for eligibility of Impermanent Loss Protection Funds (ILP)
- 1.No interaction with the yield farm in question (No Harvesting, No Adding Funds, No Removal of Funds) for a 30 day period*
- 2.Drop in the overall value of the LP caused by Impermanent Loss since initial deposit
- 3.Funds available in the ILP Fund of DefySwap to provide protection**
- 4.Upon claim you MUST withdraw the ENTIRETY of your LP (This will also harvest for you) in order to trigger the ILP system to pay you out.
*Farmers on DefySwap are automatically enrolled and provided ILP protections provided the specific farm that you are interacting with is eligible. That said please take note that the ILP fund itself is just that, a FUND. It is not some unlimited source to protect against complete lack of user management. At the end of the day, none of anything we say or note is financial advice, nor is it suggestion. All users are expected to manage their own risk and proceed accordingly.
You will notice that of the 4.99% tax on the $DFY token - 0.5% of it is used to dedicate to filling the ILP fund. During bearish times where an inordinate amount of claims may be made, the fund is paid out on a first come first serve basis until depleted. Once depleted you can either wait to withdraw until the fund fills back up a bit or just withdraw anyways, in which case, you will forfeit any eligibility to the fund itself.
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Last modified 4mo ago