Providing liquidity to an automated market maker pool means arbitrageurs rebalance your holdings as prices move, often leaving you worse off than if you’d simply held the two tokens.
How it works
Given the ratio of a token’s price at withdrawal to its price at deposit, the standard constant-product-pool formula estimates the percentage loss versus simply holding both tokens outside the pool.
What this does not include
This does not include trading fees earned from the pool, which can offset or even exceed impermanent loss for a popular pool — the “loss” this calculator shows is purely from the price-divergence mechanic, not the pool’s total return.
How to use this calculator
- Enter the price ratio between withdrawal and deposit for one token relative to the other.
Frequently asked questions
Why is it called “impermanent”?
Because the loss fully reverses if the token prices return to their original ratio before withdrawal — it only becomes a real, “permanent” loss once you actually withdraw while prices are diverged.
Does impermanent loss only happen when a price falls?
No — it happens whenever the relative price ratio between the two pooled tokens changes in either direction; the formula only cares about the magnitude of divergence, not which token moved.
Can trading fees make up for impermanent loss?
Often yes for high-volume pools — many liquidity providers earn enough in trading fees to more than offset impermanent loss, though that’s never guaranteed.
