For instance, as an instance an LP deposits liquidity into an ETH-BTC pool at a time when 1 BTC equals 10 ETH. A month later, the worth of ETH doubled whereas BTC hasn’t modified. When this disparity happens, arbitrage merchants will bounce on the alternative to purchase ETH from that pool and promote it on a DEX at the next worth thereby bringing the pool ratio and token costs again to market price. This might harm a depositor or profit them, relying on which facet of the commerce they’re on.
