Over the past two days, I’ve seen people say that “throwing liquidity into the pool to do market making” is just as easy as saving money… The truth is: the AMM curve is basically forcing you to buy low and sell high. Once the market starts moving, your asset allocation gets passively reshuffled. Impermanent loss isn’t some magical thing— the more violently prices swing, the more obvious it gets. Transaction fees can definitely help offset some of it, but it depends on whether trading volume or volatility is more ruthless. Don’t expect to just lie there and wait it out until the risk is gone.

By the way, that whole fight over NFT royalties right now also follows a similar logic: everyone wants stronger liquidity and less friction, but creators also hope for long-term income. The market keeps tugging back and forth between “ideal” and “actually workable,” and it gets pretty ugly… Anyway, I’m testing pools on L2 now. I’ll focus first on transaction fees and trading volume, and on the drawdown I can tolerate—whether I make money or not is secondary. At least, don’t treat market making like a fixed deposit.