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Why am I seeing less value locked in my liquidity portfolio than the initial amount that I provided?

The decrease in the value locked in your liquidity portfolio is likely due to impermanent loss. Impermanent loss occurs when the price of the token you provided liquidity for changes relative to when you initially deposited it into the pool. The larger the price change, the greater the loss. The reduced value locked that you observe indicates that impermanent loss has occurred.

Please keep in mind that impermanent loss is a common aspect of providing liquidity, and it is important to understand and assess the potential risks before participating in liquidity provision.

Why would I suffer a loss from providing liquidity even when the liquidity is still in range when I remove it?

The loss you encountered was due to impermanent loss. Despite the price remaining within the specified range, the price at the time of removing liquidity was higher or lower than the initial price when you provided liquidity. This price change resulted in impermanent loss.

It's important to note that a narrow price range may amplify the impact of impermanent loss. While a narrower range enhances capital efficiency, it also increases the sensitivity of your liquidity to price fluctuations, which can result in a larger loss when you remove liquidity.

It's crucial to understand that impermanent loss is an inherent risk of liquidity provision, and it can occur even when the price remains within the specified range. When considering providing liquidity, it is essential to carefully assess the potential risks and rewards, including the possibility of impermanent loss.

What would happen when my liquidity goes out of the price range I set?

When your liquidity goes out of the price range you set, it will be automatically converted into a net position. The direction of the net position is determined based on which end of the price range it exceeds.

For example, let's consider the WETH/USDB pair with a price range set at 2000 - 4000. If the fair price of WETH reaches 4000 or goes above it, your liquidity will be converted into a short position. On the other hand, if the fair price hits 2000 or falls below it, your liquidity will be converted into a long position.

Why wasn't the fund returned to my account after I removed my liquidity, even though it was still within the price range when I removed it?

When you remove the liquidity you provided, it is automatically converted into a net position. In order to retrieve the margin, it is advisable to close the position in trade immediately after the liquidity removal.

Why wasn't the fund returned to my account after my liquidity was removed due to going out of range?

When the liquidity you provide goes beyond the price range you set, it is automatically converted into a net position. In the event that the liquidation price is reached, your position will be liquidated. In such cases, it's important to note that you will not receive the margin back in your account.