Provide liquidity for moons for fun and profit, but understand IL

Hey folks - lots of new people here who may not know that on Arbitrum Nova there is a SUSHI V2 pool that is incentivized with 2k MOON and 50 SUSHI per day, which makes for about 35% APR with the current deposits. So, you can use your moons to earn more moons and also increase the trade liquidity for the DEX.

To do this, you deposit an equal value of two different assets into a liquidity pool, in this case Moon and ETH. But here are some things to keep in mind and how Impermanent Loss works:

• Impermanent Loss: Impermanent loss occurs when the value of your original assets in the pool diverges from what you would have if you simply held onto those assets in your wallet without providing liquidity. If (when) the price of MOON increases, you might end up with more ETH and less MOON in the pool compared to your initial deposit. The impermanent loss is not a permanent loss because it's based on the changing prices of assets (and so could realign or change further). Impermanent loss is "realized" when you withdraw your liquidity from the pool. At that point, you lock in the gains or losses you've experienced. If the loss is significant, it might outweigh the fees and rewards you've earned from providing liquidity.

Impermanent loss is inherent to providing liquidity on automated market maker (AMM) platforms, and it occurs due to the constant rebalancing of the pool to maintain a 50/50 ratio.

TLDR: You can provide MOON/ETH liquidity on Arb Nova with Sushiswap and earn MOONs. However, you should understand that this may result in impermanent loss due to price fluctuations, and it's called "impermanent" because it disappears if the prices of the deposited assets return to their original levels.