Impermanent Loss Calculator — DeFi Liquidity Pool
When you deposit two tokens into an AMM liquidity pool (like Uniswap, Curve, or PancakeSwap), arbitrageurs rebalance your position as prices move — you end up with fewer of the gaining token than if you had simply held both. This difference is impermanent loss (IL). Enter the percentage price change of one token relative to the other to see exactly how much IL you absorb, so you can judge whether trading fees and yield rewards actually compensate the risk.
Impermanent loss (IL) in a 50/50 AMM pool is calculated as: IL = 2√r / (1 + r) − 1, where r is the price ratio after the move. Key reference values: a 2× price move (±100%) causes −5.72% IL; a 3× move (±200%) causes −13.4% IL; a 5× move (±400%) causes −25.5% IL; a 10× move (±900%) causes −42.5% IL. IL is symmetric — a +100% rise and a −50% drop both produce the same ~5.72% loss. IL only becomes permanent when you withdraw; if prices revert, the loss reverses.
When to use this calculator
- Evaluating whether a new ETH/USDC pool position is worth it given current fee APR and expected volatility
- Stress-testing an existing LP position — if ETH drops 50%, how much IL do you absorb relative to just holding?
- Comparing stablecoin-pair pools (near-zero IL) vs volatile pairs (high IL) to decide where to deploy capital
- Teaching DeFi concepts: showing students the exact IL curve and how it steepens at large price moves
ETH doubles in price: +100% move
- You provide 1 ETH + $2,000 USDC to a Uniswap V2 pool when ETH = $2,000 (total: $4,000)
- ETH price rises to $4,000 (+100%). Arbitrageurs buy ETH from the pool, rebalancing it.
- Your pool share is now worth ~0.707 ETH + $2,828 USDC ≈ $5,657
- If you had held: 1 ETH × $4,000 + $2,000 = $6,000
- Impermanent loss = $5,657 / $6,000 − 1 ≈ −5.72%
- Enter 100 in the calculator → IL = −5.72%
How it works
2 min readWhat Is Impermanent Loss?
AMMs like Uniswap use the constant product formula: x × y = k. When Token A's price rises, arbitrageurs buy it from the pool (selling Token B) until the pool's implied price matches the market price. You end up holding less of the appreciated token and more of the depreciated one — compared to simply holding both tokens in your wallet.
The loss is called impermanent because if prices revert to their original ratio before you withdraw, the loss disappears. It becomes permanent the moment you exit the position.
The Impermanent Loss Formula
The standard AMM impermanent loss formula for a 50/50 pool is:
IL = 2 × √r / (1 + r) − 1Where r is the new price ratio of Token A relative to Token B expressed as a multiple. If the price change is p%, then r = (100 + p) / 100.
For example, a +100% move means r = 2. Substituting:
IL = 2 × √2 / (1 + 2) − 1
= 2 × 1.4142 / 3 − 1
= 0.9428 − 1
= −0.0572 = −5.72%Impermanent Loss Reference Table (50/50 Pool)
| Price Change | Price Ratio (r) | Impermanent Loss |
|---|---|---|
| ±10% | 1.1× or 0.91× | −0.11% |
| ±25% | 1.25× or 0.8× | −0.62% |
| ±50% | 1.5× or 0.67× | −2.02% |
| ±100% (2×) | 2× or 0.5× | −5.72% |
| ±200% (3×) | 3× or 0.33× | −13.40% |
| ±400% (5×) | 5× or 0.2× | −25.46% |
| ±900% (10×) | 10× or 0.1× | −42.50% |
| ±9900% (100×) | 100× or 0.01× | −81.11% |
IL is symmetric — a +100% rise and a −50% drop both produce ~5.72% IL, because both result in a 2× relative price change between the two tokens.
How to Decide If a Pool Is Worth It
1. Estimate expected IL using this calculator with your worst-case price scenario.
2. Find the pool's current fee APR (visible on Uniswap/DeFiLlama analytics).
3. Add any incentive/yield APR (liquidity mining rewards).
4. Net APR = Fee APR + Incentive APR − IL (annualised estimate).
If net APR > 0 comfortably, the pool may be attractive. Stablecoin pairs (USDC/USDT) have near-zero IL and are the safest starting point.
Concentrated Liquidity (Uniswap V3 / V4)
In Uniswap V3, you set a price range. Capital efficiency increases (you earn more fees per dollar), but if the price moves outside your range, you stop earning fees entirely and your position converts 100% into the depreciating token — effectively magnifying IL. This calculator covers the standard 50/50 constant-product model; concentrated liquidity IL requires a separate calculation.
Disclaimer
This calculator is for educational and planning purposes. DeFi protocols carry smart-contract risk, liquidity risk, and regulatory risk beyond impermanent loss. Do not invest funds you cannot afford to lose.
Frequently asked questions
What is impermanent loss in simple terms?
Impermanent loss is the difference in value between keeping your tokens in a DeFi liquidity pool vs simply holding those same tokens in your wallet. It arises because the AMM's rebalancing mechanism automatically sells your winning token and buys your losing token as market prices diverge — you miss out on the full upside of the gainer.
What is the impermanent loss formula?
IL = 2√r / (1 + r) − 1, where r is the price ratio after the move (e.g., if the token doubles, r = 2). For a +100% move: IL = 2×1.4142/3 − 1 = −5.72%. For a +200% move (3×): IL = 2×1.732/4 − 1 = −13.4%.
Why is the loss called 'impermanent'?
Because it only materialises when you withdraw. If the two tokens' prices return to the same ratio they had when you deposited, the loss reverses to zero. The loss becomes permanent the moment you exit the pool with prices diverged from your entry ratio.
Does a token price going down cause the same IL as a token going up?
Yes — IL depends on the ratio of price change, not the direction. ETH rising 100% (r = 2) and ETH dropping 50% (r = 0.5) both produce roughly the same ~5.72% IL, because in both cases one token is worth 2× the other relative to the starting ratio.
How much IL do I get if ETH triples in price (+200%)?
A 200% increase (r = 3) gives IL = 2×√3/(1+3) − 1 ≈ −13.4%. Your LP position is worth about 13.4% less than if you had held 50% ETH + 50% USDC outside the pool. Trading fees and liquidity incentives need to exceed 13.4% to put you ahead.
Do trading fees always offset impermanent loss?
Not always. It depends on: (1) the fee tier of the pool (e.g., 0.05%, 0.3%, 1%), (2) the trading volume and thus fee income generated, and (3) how much prices move. High-volatility pairs generate more fees but also more IL. Stablecoin pools have low IL and moderate fees — generally a safer choice for conservative LPs.
Is impermanent loss different on Uniswap V3 vs V2?
Yes. In Uniswap V2, you provide liquidity across the full price range — IL follows the standard formula above. In Uniswap V3, you concentrate liquidity in a price band, earning more fees within that band but risking 100% conversion to the losing token if the price exits your range, which can significantly amplify total losses.
What pool types have the lowest impermanent loss?
Stablecoin-to-stablecoin pools (e.g., USDC/USDT) have near-zero IL because both tokens track $1. Curve Finance uses the StableSwap invariant that further minimises IL for pegged assets. Pools with correlated volatile assets (e.g., stETH/ETH) also have low IL. Uncorrelated volatile pairs (ETH/MEME) have the highest IL.
Can I reduce impermanent loss without leaving the pool?
Partially. Some protocols have offered IL protection (e.g., Bancor, though discontinued). Single-sided liquidity options reduce exposure. Rebalancing your range on Uniswap V3 can help but incurs gas costs and taxable events. The most reliable hedge is choosing pools whose tokens move together, or stablecoin pairs.
Where can I track my actual impermanent loss on a live position?
Tools like DeFiLlama Portfolio, APY.vision, Revert Finance, and the Uniswap analytics tab show real-time IL for connected wallets, broken down by pool and time period.