Let's look at a #hypothetical situation to see how impermanent/temporary loss occurs. #Suppose a liquidity provider with 10 ETH wants to offer liquidity to a 50/50 ETH/USDT pool
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While Tesla stock has roughly halved since then, Munger's #hypothetical #position would still be worth
On the other hand, all of the #probability density to the right of that line represents #hypothetical portfolios that outperformed the #market.
All of the probability density to the left of that vertical line represent #hypothetical portfolios that underperformed the #market return.
The blog post then went on to construct #hypothetical portfolios and compare the returns across each scenario. Here is a #visual and #description:
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