Impermanent Loss Calculator
Estimate the impermanent loss you suffer as a liquidity provider when token prices diverge from your entry point. Use this before or after providing liquidity in AMM pools like Uniswap or SushiSwap.
About this calculator
Impermanent loss (IL) occurs when you deposit two tokens into an automated market maker (AMM) liquidity pool and their price ratio changes relative to when you deposited. The AMM constantly rebalances your holdings to maintain a 50/50 value split, which means you end up holding less of the appreciating asset than if you had simply held both tokens. The formula is: IL% = (2 × √(rA × rB) − rA − rB) × 100, where rA = currentPriceA / initialPriceA and rB = currentPriceB / initialPriceB. A result of −5% means your liquidity position is worth 5% less than simply holding the tokens outside the pool. The loss is 'impermanent' because it reverses if prices return to the original ratio, but it becomes permanent when you withdraw liquidity.
How to use
Suppose you deposit into a pool when Token A = $100 and Token B = $1. Later, Token A rises to $200 while Token B stays at $1. Compute rA = 200/100 = 2 and rB = 1/1 = 1. IL% = (2 × √(2 × 1) − 2 − 1) × 100 = (2 × 1.4142 − 3) × 100 = (2.8284 − 3) × 100 = −17.16%. Your LP position is worth about 17.16% less than if you had held Token A and Token B separately in your wallet.
Frequently asked questions
What causes impermanent loss in a liquidity pool?
Impermanent loss is caused by the constant-product formula (x × y = k) that AMMs use to rebalance token ratios as prices change. When one token appreciates, arbitrageurs buy it from the pool and sell the other token in, shifting your holdings toward the cheaper asset. The greater the price divergence between the two tokens since deposit, the larger the impermanent loss. Even a 2× price move on one token can produce roughly 5.7% impermanent loss.
How do I know if trading fees offset my impermanent loss?
To determine net profitability, compare the trading fees earned over the period to the impermanent loss percentage. Most AMMs display your accumulated fees in the liquidity dashboard. If your fee income exceeds the IL percentage applied to your deposited value, you are net positive compared to holding. High-volume, low-volatility pairs (e.g., stablecoin pairs) tend to generate sufficient fees to offset minor IL, while exotic pairs with large price swings rarely do.
When does impermanent loss become permanent?
Impermanent loss becomes a realized, permanent loss the moment you withdraw your liquidity from the pool at a price ratio different from your entry ratio. As long as you remain in the pool, the loss is only 'on paper' and could reverse if prices revert. However, waiting for prices to revert carries its own risk, including opportunity cost and further price movement. Many LPs treat IL as a cost of doing business and focus on whether total fee revenue justifies it.