Impermanent Loss Calculator

What is Impermanent Loss?

Impermanent loss (IL) occurs when you provide liquidity to an automated market maker (AMM) like Uniswap, SushiSwap, or Balancer, and the price of your deposited tokens changes compared to when you deposited them. The greater the price divergence, the more impermanent loss you suffer. It's called "impermanent" because the loss only becomes permanent when you withdraw your liquidity.

How is impermanent loss calculated?

For a standard 50/50 pool, impermanent loss is calculated using the formula: IL = 2 × √(r) / (1 + r) − 1, where r is the price ratio (new price / initial price). For weighted pools (like Balancer 80/20), the formula adjusts based on the weight parameters. The calculator handles both cases automatically.

What are common impermanent loss scenarios?

If one token price doubles (2x) in a 50/50 pool, IL is about 5.7%. If one token goes 5x, IL is about 25.5%. If one token drops to 0, you lose 100% compared to holding. Volatile token pairs experience higher IL, while stable pairs (USDC/DAI) have near-zero IL.

How do pool weights affect impermanent loss?

Weighted pools (like Balancer's 80/20 or 95/5) reduce impermanent loss for the higher-weighted token. An 80/20 ETH/USDC pool will have less IL than a 50/50 pool when ETH price changes, because 80% of the pool value stays in ETH. However, the reduced IL comes with less trading fee income from the lower-weight token.

Can trading fees offset impermanent loss?

Yes, trading fees earned by liquidity providers can offset or even exceed impermanent loss. High-volume pools with moderate price movements often generate enough fees to make LP profitable despite IL. This calculator shows the pure IL without fees so you can compare with the expected fee income.

Common Impermanent Loss Examples

• 1.25x price change → 0.6% IL (50/50 pool)
• 1.50x price change → 2.0% IL (50/50 pool)
• 2x price change → 5.7% IL (50/50 pool)
• 3x price change → 13.4% IL (50/50 pool)
• 5x price change → 25.5% IL (50/50 pool)