In liquidity pools, you can notice one interesting situation. Everything remains calm as long as the price of one of the tokens stays stable. But as soon as one of the assets begins to decline in price, the behavior inside gradually changes.

This is especially noticeable when observing pools within the $TON network through the STONfi liquidity infrastructure, as it is currently the largest concentration of TVL in the entire network. There you can quite clearly see how the ratios of tokens, liquidity, and activity change in different pairs when the market begins to move.

The thing is, liquidity pools always maintain a balance between two tokens. When the rate of one falls, the algorithm automatically begins to redistribute their ratio within the pool. As a result, the share of the weaker token gradually increases, while the share of the second decreases.

For a liquidity provider, this may look unexpected. The portfolio becomes larger in the asset that just started declining. This is exactly how what is called impermanent loss appears in DeFi. Essentially, the pool constantly tries to maintain balance between tokens, even if the market moves in one direction. And these losses are precisely the most unpleasant part of market volatility, which exchanges are currently fighting. For example, STONfi fights this by having their STON/USDT pool compensate for losses if a user encounters them while supplying liquidity to this pair.