InfoCrypto

Impermanent Loss Calculator

Enter what the prices did and this shows the gap between providing liquidity and simply holding the two assets.

Last reviewed: Written and checked by the InfoCrypto editorial team

Split 50/50 between the two assets at entry.

%

Percentage change since deposit. Use a negative number for a fall.

%

Use 0 for a stablecoin.

%

Trading fees earned as a percentage of your deposit.

The formula

r = (1 + change in A) ÷ (1 + change in B) IL = 2√r ÷ (1 + r) − 1 Net result = pool value + fees earned − value if simply held

Only the ratio between the two prices matters. If both assets double, the ratio is unchanged and there is no impermanent loss at all — you simply have twice as much. The loss appears when one moves relative to the other.

This also explains why the loss is symmetric: a ratio of 2 and a ratio of 0.5 produce identical impermanent loss, because the formula depends on the ratio's distance from 1 in either direction.

Reading the result

The important comparison is the last row of the formula above. Impermanent loss on its own is not a verdict — a position can suffer 15 % impermanent loss and still be profitable if it earned 20 % in fees, and can suffer 2 % and be a poor choice if it earned nothing.

What to check before providing liquidity:

  • Historical volume relative to pool size. Fee income is a share of volume, so a pool with little trading pays little regardless of its advertised APY.
  • How correlated the pair is. Two stablecoins barely diverge; a volatile token against a stablecoin diverges constantly.
  • Where the advertised yield comes from. If most of it is emitted governance tokens, recalculate assuming those tokens lose most of their value.
  • Entry and exit gas costs, which can exceed the fees earned on a small position.

Our full explanation of the mechanism is in Impermanent Loss Explained.

What this model leaves out

The calculation assumes a classic constant-product pool with a 50/50 weighting, which covers most automated market makers but not all of them:

  • Weighted pools (for example 80/20) have a different and generally smaller impermanent loss curve.
  • Stablecoin-optimised curves are designed to minimise divergence within a narrow band and behave very differently.
  • Concentrated liquidity positions amplify both fee income and impermanent loss, and if price leaves your chosen range you end up holding entirely the weaker asset with no fees at all.
  • Tax is ignored here. In many jurisdictions entering and exiting a pool are disposals and fee income is taxable.

Frequently asked questions

Is impermanent loss ever a gain?

No. Relative to holding the two assets, a constant-product pool never outperforms — the formula is bounded at zero when prices do not diverge. Fee income can more than compensate, but the divergence component itself is never positive.

Do stablecoin pools have impermanent loss?

Almost none while both hold their pegs, which is why they are the most reliable pools for liquidity provision. If one depegs, the loss can be severe and sudden.

What about concentrated liquidity?

It multiplies both the fee income and the impermanent loss within your chosen range. Outside the range you hold 100 % of the weaker asset and stop earning fees entirely. This model does not cover it.