I've been trying to grab my head around the XYK formula for impermanent loss, I have attached the referenced example and section that confuses me.
If in this scenario ETH increases to 200USD: how do I use the formula to get the new balance of 7.071 ETH in the pool? I understand that 200*7.071 must = 1414.21 DAI, but how do I get the 1414.21 DAI?
I feel like there always two unknown variables in the XYK formula…?
Any insight appreciated.