calculator.financialcalculator.financial

Impermanent Loss Calculator

Calculate the potential losses from providing liquidity to automated market makers (AMMs) in DeFi. Compare the value of your liquidity pool position against simply holding the assets in your wallet.

$
$
$
$
$
Impermanent Loss
-5.72%
Loss in USD
-$85.79
Value in Pool
$1,414.21
If you had simply held your tokens, your portfolio would be worth $1,500.00. By providing liquidity, your pool position is now worth $1,414.21, resulting in an impermanent loss of -$85.79 (-5.72%).

Your initial pool share consisted of 0.5000 Token A and 500.0000 Token B. Due to price changes, your share is now 0.3536 Token A and 707.1068 Token B.
Impermanent Loss-5.72%

Frequently asked questions

What is impermanent loss?

Impermanent loss occurs when you provide liquidity to an automated market maker (AMM) and the price of your deposited assets changes compared to when you deposited them. The larger this divergence, the larger the impermanent loss. It's called 'impermanent' because the loss is only realized if you withdraw your liquidity at those changed prices. If the prices return to their original ratio, the loss is reversed.

Why does impermanent loss happen?

AMMs like Uniswap v2 rely on a constant product formula (x * y = k) to maintain the pool's balance. When external market prices change, arbitrageurs trade against the pool to bring its prices in line with the market. This process adjusts the pool's token balances, leaving liquidity providers with more of the depreciating asset and less of the appreciating asset, resulting in a loss compared to simply holding the original tokens.

Does this calculator account for trading fees?

No. This calculator only measures the divergence loss. In reality, liquidity providers earn trading fees. To determine if providing liquidity was profitable, you must compare the impermanent loss against the total trading fees you earned while in the pool.