# Three Possible States in IMM

At any given time, IMM pool assets in US dollars would be in one of three possible states: equilibrium, LP token shortage, or bridging token (ETH) shortage.

* Equilibrium - both assets have the same value&#x20;
* LP Token Shortage - the LP token value is lower than the ETH value&#x20;
* ETH Shortage - the ETH value is lower than the LP token value

In the equilibrium state, both the LP token and the ETH are in 50/50 ratio in US dollar value, and the IMM exchange rate is equal to the Oracle price. At this stage, any trade transaction in the pool disrupts the equilibrium state.

In case of LP token shortage, the IMM will try to sell the excess bridging tokens with an exchange rate less than the Oracle price, incentivizing traders to buy ETH that will help the pool move back to equilibrium.

In case of ETH token shortage, the IMM will try to sell the excess bridging tokens with an exchange rate higher than the Oracle price, incentivizing traders to buy LP tokens that will help the pool move back to equilibrium.\
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