Impermanent Loss in Automated Market Maker (AMM) Model

Description:
Liquidity providers face losses due to price fluctuations between deposited tokens and their market value.
Cause:
AMM-based liquidity pools adjust token balances automatically, leading to impermanent loss when market prices change significantly.
Solution:
Implement dynamic fee structures and Layer-2 solutions to mitigate impermanent loss risks.

contract AMMWithDynamicFees {
    uint256 public baseFee = 3; // Default fee (0.3%)
    uint256 public volatilityMultiplier = 1;

    function calculateFee(uint256 priceChange) external view returns (uint256) {
        return baseFee + (priceChange * volatilityMultiplier);
    }
}

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