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FAQ
Frequently Asked Questions
What is Indirect Liquidity Providing?
Indirect Liquidity Providing is supplying tokens for lending to yield farmers. The borrowers use the funds to earn higher yields on decentralized exchanges and then share a portion of the rewards with the Indirect Liquidity Providers. All rewards are paid automatically.
What is Leveraged Yield Farming?
Leveraged Yield Farming means borrowing tokens to increase one’s Liquidity Providing position on a decentralized exchange. This allows yield farmers to multiply their yields many times over.
Will Indirect Liquidity Providers (lenders) always get their money back?
Smart contracts ensure that funds are automatically repaid to lenders. If a loan starts becoming too risky, the contracts automatically liquidate the borrower’s position and deposit all the funds back in the lender’s account with no loss to the lender.
How does Impermax generate yield for users?
AMMs like Uniswap let liquidity providers earn yield from transaction fees and liquidity mining. Impermax allows users to greatly increase the returns of these yields in exchange for higher or lower risk.
How do I earn using Indirect Liquidity Providing on Impermax?
Indirect Liquidity Providing is much easier than traditional liquidity providing. Just deposit any supported token on the Impermax app, earn passive returns, and withdraw them at any time. It works similar to staking.
How does governance work?
An on-chain governance system in the model of Compound’s will be rolled out in the next months. When complete, IMX holders will be able to vote on proposals, in-app economics, and distribution of reserve funds from within the Impermax app.
After deleveraging I can't see my LP tokens. Have I lost my funds?
No, your funds are safe. Deleveraging breaks down the LP token into the 2 underlying assets and uses them to pay the loan. The remaining tokens are sent to your wallet as the underlying assets.
What is the purpose of the IMX token?
IMX is a governance token that controls all the reserve income generated by the Impermax lending markets across all supported networks. Holders will have the ability to receive this passive income, as well as governing the future of the project.
How does Impermax generate value for IMX token holders?
Up to 20% of each interest payment is sent to the reserve account to be distributed as profits and/or growth development funds, according to the on-chain governance.
Where can I buy IMX?
IMX is currently available on
Which wallets are supported?
Currently MetaMask.
What is Leverage?
Leverage is when you borrow funds and use them to increase the size of your position. You can earn increased rewards on this higher amount, then later pay back the loan. For example, if you use $1,000 as collateral to borrow $4,000 we call that x5 leverage because your position went from $1,000 to $5,000.
What are the risks of Leveraged Yield Farming?
Too much change in LP token price can mean your leveraged position gets liquidated to ensure the lender is repaid. When a position is liquidated, 4% of the borrowed amount is taken from the starting collateral. Liquidation is only possible with leveraged positions and borrowing, not Indirect Liquidity Providing. If the relative prices of the tokens in a LP token pair diverge too much, the system automatically sells the LP tokens and repays the lender. You can choose the safe price limits on each position when you start leveraging. As with all DeFi, there are also contract risks, although Impermax has taken steps to reduce these.
How do I earn with Leveraged Yield Farming on Impermax?
Yield leverage is for users who want to multiply their returns at the cost of higher risk. First, provide liquidity on Uniswap V2 or any other supported AMM and acquire some LP tokens. Then deposit the LP tokens on Impermax. Then choose the amount of leverage you want. This lets you borrow funds to increase your position (and therefore earnings) by many multiples in most cases.
What is Liquidation and how is it triggered?
When you take a leveraged position you choose a price movement window for the LP token pair you are leveraging. The higher the leverage you choose, the smaller the price movement window. If the relative prices of the tokens in the pair move higher or lower than the window, your leveraged LP tokens will be sold and the loan automatically repaid. If this happens, you don’t lose your entire balance. You will only lose 4% of the borrowed amount. More details are here.
How can I avoid Liquidation?
You can reduce the risk of liquidation in several ways. Choosing token pairs with low volatility relative to each other reduces risk. Choosing lower leverage and therefore a wider liquidation window reduces risk. If you check back and see that your position is getting closer to liquidation you can reduce leverage or deleverage completely any time you want.
As a lender (Indirect Liquidity Provider) can I withdraw my deposited funds any time?
In most cases, yes. But if there is extremely high borrowing demand for a particular token there may be times where there is not enough liquidity available for you to withdraw all your tokens. These instances usually don't last long because they cause interest rates for borrowers to become very high, which balances the borrowing demand.
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