Impermanent Loss Calculator
Standard 50/50 Pool
IL vs Trading Fees Earned
Formula
IL = 2 x sqrt(price_ratio) / (1 + price_ratio) - 1
Frequently Asked Questions
What is impermanent loss?
Impermanent loss occurs when you provide liquidity to an AMM pool and the price ratio of your deposited tokens changes. The pool rebalances your holdings, and you end up with less value than if you had simply held the tokens.
Why is it called impermanent?
It is called impermanent because the loss only becomes permanent (realized) when you withdraw liquidity. If prices return to their original ratio, the loss disappears.
How can trading fees offset impermanent loss?
As a liquidity provider, you earn a share of trading fees. If the fees earned over time exceed the impermanent loss, providing liquidity is still more profitable than simply holding.
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