DeFi Impermanent Loss Calculator
Calculate impermanent loss in liquidity pools. See how price changes affect your LP position value and compare to HODL strategy.
Type of liquidity pool
Amount of first token deposited
Amount of second token deposited
Percentage change in token A price (positive = increase)
Single calculation or range analysis
Trading fee percentage of the pool
What is impermanent loss in DeFi liquidity pools?
Impermanent loss (IL) occurs when the value of tokens you provide to a liquidity pool changes compared to just holding them. When you deposit Token A and Token B at equal value, and one token's price changes, the AMM (automated market maker) automatically adjusts holdings. Since pools maintain constant product (k = x × y), price increases cause you to hold less of the appreciating asset. This loss is "impermanent" because it only becomes real when you withdraw—if prices return to original levels, the loss disappears.
How do I calculate impermanent loss?
For a 50/50 pool: IL = 2√(price ratio) / (1 + price ratio) - 1. For a 100% price increase: IL = 2√2/3 - 1 = -5.72% (5.72% loss). For 50% price decrease: IL = 2√0.667 - 1.67 = -25% (25% loss). The formula shows that larger price changes cause exponentially larger losses. A 4x price increase results in ~25% IL loss, while a 50% decrease causes ~25% IL as well.
When does impermanent loss outweigh trading fees?
Impermanent loss grows as price divergence increases. For 50/50 pools: At ±25% price change, IL is ~1.5% (fees may offset); At ±50% price change, IL is ~5.7% (fees can cover in high-volume pools); At ±100% price change, IL is ~25% (very hard to recover). For stablecoin pairs (0.01% fees), only tiny price changes are profitable. For volatile pairs (0.30%+ fees), fees may offset IL for moderate price moves.
How can I minimize impermanent loss?
Strategies to reduce IL: Use stablecoin pools (USDC/USDT) where IL is minimal; Provide liquidity in tight price ranges (Concentrated liquidity in Uniswap V3); Choose low-volatility pairs; Use delta-neutral strategies where bots hedge LP positions; Consider liquidity in pools with high trading volume (more fee revenue); Look into permanent loss protection schemes some protocols offer; or use无双币安流动性 tokens that dynamically rebalance.
Is impermanent loss actually "impermanent"?
Yes and no. If prices return to your entry point, the loss disappears (hence "impermanent"). However, in practice, crypto prices rarely return to exact entry points, and you may need to wait months or years for convergence. Meanwhile, IL compounds as price divergence grows. Professional liquidity providers use hedging (shorting one asset) to convert IL into a known small loss while earning fees. For most retail LPs, understanding IL is crucial before depositing in volatile token pairs.