Is Liquidity Provider a Market Maker or a Market Taker? How I instantly lost 4 ETH

Governance Liquidity Mining [deprecated]
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I’ve been supplying liquidity to Compound, Aave, Curve and iEarn (yEarn) for quite a bit and never had any major problem there before I decided to give a shot to Balancer. I liked the concept behind the project and wanted to get some BAL token.
So I went to the most liquid WETH - sETH Balancer pool and supplied a considerable amount of WETH as a single asset.
Before doing so I checked the price of both assets on coingecko to make sure they are practically the same. With the same belief that Balancer will divide the asses fairly like e.g. Curve does I hit the “add liquidity” button.
I’m being familiar with impermanent loss phenomenon, that’s why I always choose asses tightly pegged to each other like stable coins, renBTC, WBTS, sBTC and never have had any issue with them with the above mentioned DefI platforms.
Imagine my surprise after I checked my assets balances in the pool to find out that I’ve been instantly cut a whole 4 ETH if I decided to withdraw!

What I guess should have been done beforehand:

  1. You should have warned a user supplying a single asset about how many other assets she will get in return.
  2. You should have set a slippage ratio to choose from or warn a user not to supply a single asset if there’s a loss of more than 0.1%
  3. And the last one and most interesting: Is this the way you reward liquidity providers? Are we supposed to be market makers who choose the bid/ask spread, set up slippage etc or are we just mindless sheep to be shaved by the system?

I calculated how much time it takes to cover the losses with the 0.01% fees and around 200k daily volume. Now ready? It will take me whole twenty years to just cover the entry loss not to speak about any profit.
To say I’m disappointed is to say nothing.
So my question is: is there any way to compensate for the loss?

P.S. I found it’s quite strange than I can’t swap WETH to sETH or vice versa on https://balancer.exchange/#/swap although there’s such a pool on the platform.

1 Like
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The same thing happened to me on my very first try. I thought I fully understood what was going to happen but I ended up with about 5% slippage. There’s no warning or any slippage controls.

This is a legit proposal for improvement. I’m not asking for any compensation but I would like a fix to manually set a slippage amount.

2 Likes
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I just noticed that www.zapper.fi/invest allows you to specify a slippage when adding liquidity to a balancer pool :slight_smile: :slight_smile:

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With current sky high gas prices adding one more proxy layer would be costly. Besides there’s always SC risk.

BTW, can anybody explain if there would be any issues withdrawing from a pool when, for example, only you who’s left there?

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I’m surprised and a bit disapointed that no one adequately addressed the issues that you raised. I am testing with a much smaller amount than you. Just over 9eth, but have experience slippage of 1 eth. I too discovered zapper.fi after i added my funds to balancer.

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Can I provide two assets using Zapper along with the slippage settings? I found only a single one in the UI. Or the whole idea about Zapper was to make it possible to provide a single asset?

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Sorry for the late reply. I checked zapper from a fellow users perspective and I see no way to supply two assets. Since zapper is not affiliated with balancer, I might suggest finding out how to contact them to suggest this feature :slight_smile: