Impermanent Loss Calculator

How to Use This Calculator

1. Enter the price change percentage of the volatile token (e.g. 100 = doubled, -50 = halved).
2. Read the impermanent loss %, LP value vs HODL comparison, and fees needed to break even.
3. Use Standard 50/50 Pool tab with actual dollar amounts to see USD impact.
4. Use Concentrated Liquidity V3 tab to check if price stays within your chosen range.
5. Use Compare to HODL tab to factor in trading fees earned.
6. Professional tab adds fee APR, actual fees earned, net P&L, and days to break even.

Formula

Example

Frequently Asked Questions

• What is impermanent loss in DeFi? ▼
  Impermanent loss (IL) occurs when you provide liquidity to an Automated Market Maker (AMM) like Uniswap and the prices of the deposited tokens change after deposit. AMMs maintain a constant product formula (x×y=k) that automatically rebalances your position as prices move. When one token appreciates relative to the other, the AMM sells the appreciating token and buys the depreciating token to maintain the product — essentially forcing you to sell winners and buy losers. The result is that your LP position is worth less than if you had simply held (HODLed) the two tokens in your wallet. The loss is called "impermanent" because if prices return to their original ratio, the IL disappears. However, if you withdraw liquidity at a different price ratio than you deposited, the loss becomes permanent. The IL formula is: IL = 2√p/(1+p) − 1, where p is the new price ratio relative to the initial price.
• When does impermanent loss become permanent? ▼
  Impermanent loss becomes permanent when you withdraw your liquidity from the pool at a price ratio different from when you entered. The loss exists only on paper while your tokens remain in the pool — it is "impermanent" because the AMM math is reversible. If Token A doubles in price and you withdraw, you will have fewer Token A and more of the stablecoin than you deposited, and the USD value will be less than HODLing would have yielded. That gap is permanently realized. Similarly, if the project you provided liquidity for loses all value (goes to zero), you will exit with only the depreciating asset (the pool sells the appreciating token to buy more of the worthless one) — maximum IL of approximately 100%. In practice, token correlation matters: if both tokens in the pair tend to move together (e.g., two correlated DeFi tokens), IL is minimized. Stablecoin pairs (USDC/USDT) have near-zero IL since prices barely diverge.
• Is impermanent loss always bad for liquidity providers? ▼
  No — impermanent loss must be weighed against trading fees and liquidity mining rewards earned. In many pools, especially high-volume pairs, trading fees can significantly exceed impermanent loss, making LP positions profitable even with price divergence. For example, a volatile pool earning 50% APR in fees might easily offset a 5.7% IL from a 2× price move. The key metric is whether fee income + token incentives > impermanent loss over your holding period. Stablecoin pairs like USDC/DAI have minimal IL since prices rarely diverge, but also lower fee income. Exotic volatile pairs can generate massive IL but also attract high liquidity mining rewards during bootstrapping phases. The break-even calculation is: days needed = |IL in USD| / (daily fee income). If you expect to hold the position longer than break-even, fees compensate for IL. High-fee tiers (0.3% or 1% in Uniswap V3) on actively traded pairs often make LP positions very profitable despite IL.
• How can I minimize impermanent loss? ▼
  Several strategies reduce IL exposure. First, choose correlated token pairs — two assets that move together (wBTC/renBTC, USDC/DAI) exhibit minimal IL. Second, use stable-stable pools: Curve Finance specializes in stablecoin and pegged-asset pools (stETH/ETH, DAI/USDC/USDT) with near-zero IL due to extremely tight price correlation. Third, use concentrated liquidity (Uniswap V3) wisely: narrow price ranges amplify fees but also amplify IL if price exits the range. Wide ranges reduce IL risk but also reduce capital efficiency. Fourth, single-sided staking (where available) avoids the dual-asset IL mechanism entirely. Fifth, time your entry and exit: enter when you believe prices are at equilibrium and exit before major anticipated volatility. Sixth, use protocols with IL protection like Bancor v2.1 (which attempted to compensate LPs for IL from protocol reserves, though Bancor later deprecated this feature during the 2022 bear market).
• What's the difference between Uniswap V2 and V3 impermanent loss? ▼
  Uniswap V2 distributes liquidity uniformly across the entire price range from 0 to infinity, using the x×y=k constant product formula. This means most capital sits idle at extreme prices that are rarely reached. V2 IL follows the formula IL = 2√p/(1+p)−1 regardless of position. Uniswap V3 introduced concentrated liquidity: LPs choose a specific price range (e.g., ETH between $1,800 and $2,400) and all capital works only within that range. Benefits: capital efficiency increases dramatically (5–100× vs V2 for the same fee income), and concentrated positions earn much higher fee yields per dollar deployed. Risks: IL within the active range is identical to V2, but if price exits your range, your position converts entirely to one token and earns zero fees until price returns. A V3 position out of range holds 100% of the depreciating token (maximum directional exposure). V3 is superior for active managers willing to monitor and rebalance positions; V2 is simpler for passive holders.

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