# Impermanent Loss and Arbitrage To facilitate cross-chain transfers without token-wrapping, Kima manages liquidity pools across multiple different blockchains. As users transfer funds between these pools, liquidity providers can risk impermanent loss. In fact, in Uniswap v3, the average liquidity provider saw negative returns due to impermanent loss*¹*. Kima liquidity providers are not subject to impermanent loss. Kima is using one-sided pools, i.e. in each pool there is only 1 asset, and thus LPs are not exposed to impermanent loss. Initially, Kima will use stablecoins - assets with similar value (e.g. swap USDT on Ethereum for USDC on Solana), which reduces arbitrage risks. In addition, Kima's fee mechanism disables arbitrage opportunities, as fees go higher than the tokens' price difference. *`¹Stefan Loesch, Nate Hindman, Nicholas Welch, and Mark B. Richardson. Impermanent loss in uniswap v3. Technical report, Topaze Blue, 2021.`* --- # Agent Instructions: Querying This Documentation If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question. Perform an HTTP GET request on the current page URL with the `ask` query parameter: ``` GET https://docs.kima.network/kima-whitepaper-1/impermanent-loss-and-arbitrage.md?ask= ``` The question should be specific, self-contained, and written in natural language. The response will contain a direct answer to the question and relevant excerpts and sources from the documentation. Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.