1. At the start, the action of adding liquidity to the sAMM does not change the total risk profile of the liquidity provider, as the newly created LONG and SHORT positions exactly offset each other.

  2. After adding liquidity to sAMM, the liquidity provider has also become a trader due to the SHORT hedging position, and needs to maintain sufficient margin in the account to meet the margin requirement or might face the risk of its short hedging position being liquidated.

  3. With sufficient margin, that is, with Account Balance + Unrealized Pnl > Position MarkPrice Maintenance Margin (MMR) for the SHORT hedge position, the risk of being an AMM is similar to other protocol such as Uniswap adopting Constant Product Formula pricing model with possible Impermeant Loss, with the amount of loss the same as supplying to Uniswap should everything else equal. Check advanced topics: What is the potential impermanent loss I might have as an LP?

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