Impermanent Loss Calculator
Calculate impermanent loss for any liquidity pool position.
See exactly what you'd have vs what you hold as an LP, and how much fees need to offset the loss.
Impermanent loss (IL) is the difference in value between holding tokens in an automated market maker (AMM) liquidity pool versus simply holding those tokens in your wallet. It is called “impermanent” because the loss is not realized until you actually withdraw from the pool — if prices return to where they were when you deposited, the loss disappears.
Why does it happen?
AMMs like Uniswap v2 use the constant product formula:
x × y = k
Where x and y are the quantities of the two tokens, and k is a constant. When the price of one token changes, the pool rebalances automatically by adjusting the quantities. If ETH doubles in price, the pool sells some of your ETH (to arbitrageurs) and gives you more USDC. You end up holding less ETH than if you’d just held — exactly the amount you missed the upside on.
The impermanent loss formula
For a 50/50 pool where one asset (Token A) changes price by a ratio k (new price ÷ initial price):
IL % = (2 × √k / (1 + k)) − 1
LP Value = Initial Investment × 2√k / (1 + k)
Held Value = Initial Investment × (1 + (k − 1) / 2)
The difference between “Held Value” and “LP Value” is your impermanent loss in dollars.
Worked example
You deposit $10,000 into an ETH/USDC pool. ETH starts at $2,000 and rises to $4,000.
- k = 4,000 / 2,000 = 2.0
- LP Value = $10,000 × (2√2 / 3) = $10,000 × 0.9428 = $9,428
- Held Value = $10,000 × (1 + 0.5) = $15,000
- Impermanent Loss = $15,000 − $9,428… wait — LP value also grows in dollar terms.
Let’s compare correctly:
- LP Value = $11,892 (the pool is worth more than initial, just less than holding)
- Held Value = $15,000
- IL = $15,000 − $11,892 = $3,108 (20.7%)… actually for a 2× price change, IL = 5.72%
The correct IL % formula gives: 2√2 / (1+2) − 1 = 2(1.4142)/3 − 1 = 0.9428 − 1 = −5.72%
So relative to holding, you lose 5.72% of your position value. On a $10,000 deposit: ~$572 loss vs holding.
Impermanent loss reference table
| Price Change | IL % |
|---|---|
| 1.25× (up 25%) | 0.6% |
| 1.5× (up 50%) | 2.0% |
| 2.0× (doubled) | 5.7% |
| 3.0× (tripled) | 13.4% |
| 5.0× (5×) | 25.5% |
| 10.0× (10×) | 42.5% |
| 0.8× (down 20%) | 0.6% |
| 0.5× (halved) | 5.7% |
| 0.25× (−75%) | 25.5% |
Note: IL is symmetric — a 2× price increase causes the same IL % as a 50% price decrease.
Concentrated liquidity (Uniswap v3)
Uniswap v3 introduced concentrated liquidity, allowing LPs to provide liquidity only within a specified price range. This earns much higher fees on the same capital — but if the price moves outside your range, you stop earning fees and experience maximum IL.
When is it worth providing liquidity?
Providing liquidity is profitable when: Trading Fees Earned > Impermanent Loss. High-volume, lower-volatility pairs (e.g., USDC/USDT, ETH/USDC on a busy DEX) typically generate enough fees to offset IL. Highly volatile pairs with low trading volume are the most dangerous for LPs.