Risks
When providing liquidity in a liquidity pool, the primary risk that must be considered is impermanent loss (IL). This refers to the temporary loss of funds that may occur when providing liquidity, resulting from the difference between holding an asset and providing liquidity in that asset.
In an ideal scenario where no impermanent loss occurs, liquidity providers (LPs) would only earn revenue from the trading fees. However, LPs can still make a profit even with impermanent loss as long as the amount lost is less than the fees earned.
The risk of impermanent loss in AMM is when you provide your NFTs and EGLD to a liquidity pool instead of holding them. If the NFT price goes up, the liquidity pool may rebalance and you may not earn as much as if you had just held onto your NFTs.