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Impermanent Loss Calculator
Calculate impermanent loss for your liquidity pool positions. See how price divergence between paired assets affects your returns compared to simply holding the tokens.
Enter token prices at deposit and now for a 50/50 liquidity pool. IL is computed from the relative price change between the pair.
Impermanent Loss
-2.02%
Pair ratio changed +50.0% from deposit
-$101 vs holding
HODL Value
$5K
LP Value (excl. fees)
$5K
1.25x price change:
0.6% IL
1.5x price change:
2.0% IL
2x price change:
5.7% IL
5x price change:
25.5% IL
Impermanent loss is one of the most misunderstood concepts in DeFi, yet it's critical for anyone providing liquidity to automated market makers (AMMs) like Uniswap, SushiSwap, PancakeSwap, or Curve. This calculator helps you understand exactly how much you're losing (or could lose) compared to simply holding your tokens in a wallet.
When you provide liquidity to a pool, you deposit two tokens at a specific price ratio. As prices change, arbitrageurs rebalance the pool to match market prices, which means you end up with more of the token that decreased in value and less of the token that increased. This rebalancing creates an opportunity cost compared to holding, that's impermanent loss.
The "impermanent" part comes from the fact that if prices return to their original ratio, the loss disappears. However, for most liquidity providers, this loss becomes permanent because they withdraw at different price ratios. Understanding IL is essential for evaluating whether the trading fees you earn as an LP actually offset this cost. Our comprehensive DeFi trading guide covers more strategies for managing these risks.
Price Divergence
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Risk Assessment
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Impermanent loss occurs due to the constant product formula used by AMMs: x × y = k. When external prices change, arbitrageurs trade against the pool until the pool price matches market price, redistributing tokens between liquidity providers.
The Impermanent Loss Formula
Where price_ratio is the relative price change of one token against the other. This formula shows that IL depends only on the magnitude of price divergence, not the direction. A 2x increase or 50% decrease both create the same IL.
Why IL Happens: A Simple Example
Imagine you deposit 1 ETH ($2,000) and 2,000 USDC to a pool (50/50 split).
If ETH doubles to $4,000, arbitrageurs buy ETH from your pool until prices equalize.
You now have ~0.707 ETH ($2,828) and ~2,828 USDC = $5,656 total.
If you held: 1 ETH ($4,000) + 2,000 USDC = $6,000 total.
Impermanent Loss: $344 or 5.7% vs holding.
When IL Becomes Permanent
IL only becomes "realized" or permanent when you withdraw your liquidity. If prices return to their original ratio before you withdraw, IL disappears. However, in volatile markets, most LPs withdraw at different price ratios, making the loss permanent. The key question is whether fee income exceeds IL.
Use this quick reference to estimate impermanent loss based on price changes. Remember: IL is the same whether price goes up or down by the same factor.
Pro Tip: To offset 5.7% IL from a 2x price move, you need to earn more than 5.7% in fees during your LP period. High-volume pools with significant fee generation can easily exceed this, making LP profitable despite IL.
Use Correlated Pairs
LP for pairs with correlated prices like ETH/stETH, USDC/USDT, or wrapped versions. Minimal price divergence means minimal IL.
High-Volume Pools
Choose pools with high trading volume relative to TVL. More volume = more fees to offset IL.
Stablecoin Pools
Stablecoin pairs have near-zero IL since both tokens maintain ~$1 value. Great for conservative yield farming.
Time Your Entry
Enter LP positions when you believe prices are at extremes. If prices mean-revert, IL decreases.
Calculate Break-Even Fee Income
Before entering an LP position, estimate how much the price might move and calculate the minimum fee income needed to break even. If a pool generates 20% APY in fees but you expect 3x price moves (13.4% IL), you're still profitable.
Consider Concentrated Liquidity Carefully
Uniswap V3's concentrated liquidity amplifies both fees AND IL. Tighter ranges mean more capital efficiency but also more IL if price moves outside your range. Only use tight ranges if you can actively manage positions.
Track Total Return, Not Just IL
IL is just one component. Your total return = Price appreciation + Fee income - Impermanent Loss. A position with 10% IL but 25% fee income is still 15% profitable compared to holding.
Set Exit Criteria Before Entering
Define conditions for exiting your LP position: maximum IL threshold, minimum APY requirement, or price levels that would trigger withdrawal. Don't let IL compound without a plan.
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