# Risks associated with LP

When providing liquidity on either THORChain or MayaChain, it's important to understand the associated risks:

1. **Liquidity Pooling Risks**: On both THORChain and MayaChain, your deposit is balanced into a 50:50 ratio (RUNE or CACAO). This means you’re exposed to the price action of both assets in the pool, which carries the risk of impermanent loss.
2. **Impermanent Loss**: This occurs when the price ratio between the two assets changes, affecting your overall return. If the price ratio of (RUNE) decreases, liquidity providers (LPs) might face negative APR, leading to losses. Conversely, if the ratio increases, LPs could see higher profits.
3. **Leverage Risk**: Due to synthetic assets on THORChain, your liquidity position is leveraged based on the price ratio of (RUNE). This leverage can amplify both gains and losses.
4. **Security Risks**: While THORChain implements numerous security measures to minimize hacking risks, no protocol is entirely immune to security threats.

For more information about liquidity pooling, check out these resources:

* [Understanding THORChain Liquidity Providers](https://docs.thorchain.org/understanding-thorchain/roles/liquidity-providers)
* [Being a Liquidity Provider on THORChain](https://crypto-university.medium.com/thorchain-being-a-liquidity-provider-81522a1a673c)
* [Price Exposure vs. Impermanent Loss in Asymmetrical LPing](https://crypto-university.medium.com/distinguishing-between-price-exposure-and-impermanent-loss-in-asymmetrical-lping-f3fcd0e84887)
* [Under the Hood: Liquidity Pool APR](https://crypto-university.medium.com/under-the-hood-liquidity-pool-apr-3e5e662e6675)

{% hint style="info" %}
Impermanent Loss Protection (ILP) has been completely deprecated on THORChain. However, MayaChain still offers ILP and does not use synthetic assets.
{% endhint %}

### Impermanet Loss 

Impermanent loss (IL) happens when you [provide liquidity to a liquidity pool](/how-to-guides/how-to-provide-liquidity.md), and the price of your deposited assets changes compared to when you deposited them. The bigger this change is, the more you are exposed to impermanent loss. In this case, the loss means less dollar value at the time of withdrawal than at the time of deposit.


---

# 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://faqs.thorwallet.org/liquidity-pooling/risks-associated-with-lp.md?ask=<question>
```

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.