How does the impermanent loss protection work?

THORChain offers impermanent loss protection of 1% a day, which means after 100 days you are entitled to 100% reimbursement of your impermanent loss.
This means after 100d you will minimum get out what you put in (not in dollar terms but crypto asset you provided).

Example with stablecoin:
1) You provide 1000 BUSD asymmetrical to the BUSD pool.
2) At time of writing this converts automatically to 500 BUSD ($500), and 125 Rune ($500), totalling $1000.
3) Rune is fluctuating and redeemable amount is let's say 300 BUSD ($300) and 200 Rune ($450).
4) you have an impermanent loss.
5) this loss gets covered 1% per day i.e. after 100% you get reimbursed minimum 500 BUSD and 125 Rune.

Please note that the IL is not calculated based on dollar terms but digital asset terms.

Second example:
1) You provide 1 BTC asymmetrical to the BTC pool.
2) At time of writing this converts automatically to 0.5 BTC ($20k), and 5000 Rune ($20k), totalling $40000.
3) Rune and BTC price are fluctuating and redeemable amount is 0.4 BTC and 6200 Rune totalling $29000.
4) you have an impermanent loss. 5) this loss gets covered 1% per day i.e. after 100% you get reimbursed minimum 0.5 BTC and 5000 Rune.

Please note that the IL is not calculated based on dollar terms but digital asset terms.