Providing liquidity on Uniswap is not without risks. Impermanent loss is the most significant, where you may end up with less value than simply holding your assets due to price divergence. Smart contract risk, though minimal for well-audited protocols like Uniswap, always exists in DeFi. Additionally, a sudden market crash can lead to increased volatility and impermanent loss. It is vital to only invest what you can afford to lose and to diversify across different pools. Thoroughly understanding these risks before using Uniswap is essential for protecting your capital.
