Smilee FAQs

Please refer to this section for frequently asked questions.

I see most traders making profits – as an LP, am I losing money?

No! As an LP, your counterparties are not traders, but Impermanent Loss.

Thanks to Atomic Delta Hedge, traders can extract value even from the "Impermanent" Loss, meaning that if the asset your are LPing moves a lot during the epoch, and then returns to its initial value, you will just have earned fees while traders will have made profits.

You can dive deep in the topic here.

I bought Impermanent Gain and lost 100% of my position! How is this possible?

Because the position expired out-of-the-money, as a consequence you lost the entire premium. When you purchase Impermanent Gain, you're buying the right to buy or sell the underlying asset at a stated price (strike) at a specified period (expiry).

You're not trading a perp or spot! If you want to know more, check What are Options?

I just opened a new position, and it's immediately displaying a negative PnL. How is that possible?

This is because Smilee takes a fee on top of each buy & sell – therefore, upon opening a new position, it will be slightly in loss.

Where can I see all my previously closed positions?

You cant! This feature is still under development.

How is leverage calculated?

The leverage is the ratio $Notional/Premium$. Leverage changes because Premium changes as specified in Impermanent Gain Pricing.

My Impermanent Gain position is currently in profit, but the PnL Chart displays a loss. How is this possible?

The PnL Chart shows the expiry payoff, which is the payoff you'll get if you hold the position until expiry. That said, the AMM quote could be higher than your entry price.

To know more, please refer to Current & Expiry Value

What is the relationship between Implied Volatility and the price of Impermanent Gain?

In general, the higher the IV the higher Premium and vice versa.

For more details, refer to Black–Scholes Model.

Why Impermanent Gain on the same token but with different expires trades with different IV (Implied Volatility)?

This is because IV is set differently for each maturity.

In particular as seen in Volatility Oracle, for ETH and wBTC is based on Deribit.

For the other tokens, it is set by the Synthetic AMM, for each maturity based on trading activity. Arbitrageurs may find opportunities between the two.

I just purchased the majority of available Impermanent Gain lots and my position is down bad. How is this possible?

If you buy large quantities from the Synthetic AMM, the price impact of the bonding curve will penalize you, as IV (Implied Volatility) will rise a lot.

It is always suggested to split large trades in smaller batches.