What is impermanent loss?

Impermanent loss is the gap between the value of assets held in an AMM liquidity pool and the value they would have if you had simply held them in your wallet. It arises because the pool automatically rebalances toward the asset that is falling in relative price.

How is impermanent loss calculated for a 50/50 pool?

For a constant-product pool, if one asset's price changes by a factor k relative to the other, the loss is 2 times the square root of k, divided by (1 plus k), minus 1. A 2x price move gives about a 5.7 percent loss; a 4x move about 20 percent.

Why is it called impermanent?

The loss is only realised if you withdraw while prices are diverged. If the price ratio returns to where it started, the loss disappears. It becomes permanent only when you exit the position at a different ratio than you entered.

Do trading fees offset impermanent loss?

Yes. Liquidity providers earn a share of trading fees, which can more than compensate for impermanent loss in high-volume, low-volatility pools. This calculator shows the loss before fees, so compare it against your accumulated fee income to judge net profitability.

Does the direction of the price move matter?

No. Impermanent loss depends only on the magnitude of divergence, not the direction. A doubling and a halving of the relative price both produce the same 5.7 percent loss, because the constant-product formula is symmetric around the starting ratio.

Impermanent Loss Calculator

When you provide liquidity to an automated market maker like Uniswap V2, the pool rebalances your two assets as their prices move — and that rebalancing can leave you worse off than if you had simply held the tokens. That gap is impermanent loss. This calculator quantifies it exactly for a 50/50 constant-product pool and shows the holding-versus-LP comparison in both percent and dollars.

How it works

For a constant-product pool, the only input that matters is the price ratio change k (the new price of asset A relative to asset B, divided by the old ratio). The closed-form impermanent loss is:

IL = 2 × √k / (1 + k) − 1

value if held (HODL) = initial value × (1 + k) / 2      (per unit, normalised)
value in pool (LP)   = initial value × √k               (per unit, normalised)
IL %  = (LP / HODL) − 1
IL $  = deposit value × IL %

The result is always zero or negative and is symmetric: k = 2 and k = 0.5 both give the same loss, because the formula depends only on how far the ratio has diverged, not which way.

Example and tips

If one asset doubles relative to the other (k = 2), impermanent loss is about −5.7 percent; a 4x divergence costs roughly −20 percent, and a 10x move around −42 percent. Crucially, the loss is unrealised until you withdraw — if the ratio returns to where you entered, it vanishes. Always weigh the loss shown here against the trading fees and any reward emissions you earn; in busy, range-bound pools those fees frequently outpace impermanent loss, making liquidity provision net profitable.