Impermanent Loss Calculator

Calculate impermanent loss for DeFi liquidity pools. Compare LP returns to HODL and analyze if trading fees cover the IL.

Last Updated: June 14, 2026

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Initial Position

Total Investment (USD)

Token A Initial Price

e.g., ETH at $2,000

Token B Initial Price

e.g., USDC at $1.00

Price Changes (%)

Token A Price Change

New: $3,000.00

Token B Price Change

New: $1.00

Pool Parameters

Pool Weight (Token A %)

Trading Fee APY (%)

Time Held (Months)

IL Analysis

Impermanent Loss

-2.02%

$252.55 vs HODL

LP Value (+ Fees)

$14,247.45

+42.47%

HODL Value

$12,500.00

+25.00%

✓ LP + Fees beats HODL

Difference: $1,747.45

Trading Fees Earned+$2,000.00

Impermanent Loss-$252.55

Net vs HODL+$1,747.45

Token Balance Change

Token A

2.5 → 2.041241

Token B

5,000 → 6,123.724357

IL becomes permanent if you withdraw when prices diverge. If prices return to original ratio, IL approaches zero.

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Understanding Impermanent Loss

Impermanent loss is the hidden cost of providing liquidity in DeFi. When you deposit tokens into an AMM (Automated Market Maker) like Uniswap, you're essentially betting that trading fees will exceed the loss from price divergence.

This calculator helps you understand exactly how much IL you're experiencing at any price point, and whether your earned trading fees make providing liquidity worthwhile compared to simply holding.

Impermanent Loss by Price Change

Price Change	Impermanent Loss	Fees Needed to Break Even
1.25x (25% up or down)	0.6%	Low
1.5x (50%)	2.0%	Moderate
2x (100%)	5.7%	Significant
3x (200%)	13.4%	High
5x (400%)	25.5%	Very High

Note: IL is the same whether price goes up or down by the same ratio. A 2x increase and 0.5x decrease both result in ~5.7% IL.

When Does LP Make Sense?

✓ Good for LP

• Stablecoin pairs (USDC/DAI)
• Correlated assets (ETH/stETH)
• High-volume pools with good fees
• Range-bound markets

✗ Risky for LP

• Volatile small-cap tokens
• Low-volume pools
• Trending markets (strong up/down)
• Pairs with diverging fundamentals

Impermanent Loss Formula (50/50 Pool)

This is the standard formula to calculate impermanent loss for a 50/50 constant-product AMM pool (like Uniswap V2), where 'k' is the price ratio between the two assets.

ILImpermanent Loss (expressed as a negative percentage)

kPrice Ratio (the new price of the asset divided by its old price)

Manual Step: Calculating IL on a 2x Price Jump

You provide liquidity to an ETH/USDC pool when ETH is $2,000. Suddenly, ETH doubles in price to $4,000. Let's find your impermanent loss compared to just holding the ETH and USDC.

1. Find Price Ratio (k)

The price of ETH doubled, so the ratio is exactly 2.

k = \frac{\$4,000}{\$2,000} = 2

2. Find the Square Root

Take the square root of 2.

\sqrt{2} \approx 1.414

3. Solve the Fraction

Multiply the top by 2, and divide by (1+2).

\frac{2 \times 1.414}{1 + 2} = \frac{2.828}{3} \approx 0.9428

4. Subtract 1

Subtract 1 to find the final percentage.

0.9428 - 1 = -0.0572

Result

Your liquidity pool position is worth 5.72% less than if you had just held the tokens in your wallet.

-5.72\%

Frequently Asked Questions

What is impermanent loss?

Impermanent loss (IL) is the difference in value between holding tokens in a liquidity pool vs simply holding them in your wallet (HODL). It occurs because AMMs constantly rebalance your position as prices change—you end up with more of the depreciating token and less of the appreciating one.

Why is it called 'impermanent'?

It's called impermanent because the loss only becomes permanent when you withdraw from the pool. If prices return to their original ratio, the IL approaches zero. However, if you withdraw while prices are diverged, the loss becomes realized and permanent.

How is impermanent loss calculated?

For a 50/50 pool, IL = 2 × √(price_ratio) / (1 + price_ratio) - 1, where price_ratio is the new price divided by old price. A 2x price change results in ~5.7% IL, 3x results in ~13.4%, and 5x results in ~25.5% IL.

Can trading fees offset impermanent loss?

Yes, this is the key question for LPs. If the trading fees you earn exceed the impermanent loss, providing liquidity is profitable. High-volume pools with correlated or stable assets (like stablecoin pairs) often have fees > IL. Volatile pairs with low volume often don't.

How do different pool weights affect IL?

80/20 or 95/5 pools have less impermanent loss than 50/50 pools because less of your position is in the volatile asset. However, they also earn fewer trading fees proportionally. Balancer popularized these weighted pools for this reason.

What strategies minimize impermanent loss?

Strategies include: (1) Provide liquidity to correlated pairs (ETH/stETH), (2) Use concentrated liquidity (Uniswap V3) with tight ranges, (3) Choose stablecoin pairs (USDC/USDT), (4) Use weighted pools (80/20), (5) Time entries during low volatility periods.