Impermanent Loss Calculator
Calculate impermanent loss for DeFi liquidity pools. Compare your LP position value against HODLing, factor in fee income, and make informed decisions about providing liquidity.
Pool Parameters
Total USD value deposited into the liquidity pool.
Estimated annual fee income from the pool. Set to 0 to ignore fees.
Quick Tips
- Impermanent loss depends only on the price ratio change, not the direction (up or down).
- Stablecoin pairs have near-zero IL, making them lower-risk for liquidity providers.
- High fee APR can offset IL, but always check actual pool volume before committing capital.
Impermanent Loss Result
IL (USD)
-$252.55
Price Ratio Change
1.5000x
LP vs HODL Comparison
Value Comparison
Important Disclaimer
This calculator uses the constant-product AMM formula (Uniswap v2 style). Actual results may vary due to concentrated liquidity, multi-asset pools, dynamic fees, or smart contract risks. Always DYOR before providing liquidity.
What Is Impermanent Loss?
Impermanent loss is one of the most important concepts for anyone providing liquidity in decentralized finance (DeFi). When you deposit two tokens into an automated market maker (AMM) liquidity pool, the protocol algorithmically rebalances your holdings as prices change. This rebalancing means that if one token appreciates significantly relative to the other, your pool position ends up with more of the cheaper token and less of the expensive one compared to simply holding both tokens in your wallet.
The term "impermanent" reflects the fact that this loss is only realized when you withdraw your liquidity. If the prices of both tokens return to their original ratio, the loss disappears entirely. However, in practice, many liquidity providers face persistent impermanent loss because crypto asset prices are highly volatile. Understanding impermanent loss is essential before committing capital to any AMM pool, whether on Uniswap, SushiSwap, PancakeSwap, Curve, or other decentralized exchanges. This calculator helps you quantify the risk so you can make data-driven decisions about which pools to enter and when to exit.
How to Calculate Impermanent Loss
The standard impermanent loss formula for a 50/50 constant-product AMM pool is derived from the relationship between the initial and current price ratio of the two tokens. The key insight is that IL depends only on the magnitude of the price ratio change, not on which direction prices moved or the absolute dollar values.
Impermanent Loss Formula
IL = 2 * sqrt(r) / (1 + r) - 1
IL — impermanent loss as a fraction (negative value indicates loss)
r — price ratio change = (current price ratio) / (initial price ratio)
sqrt(r) — square root of the price ratio change
To use this formula step by step: First, calculate the initial price ratio by dividing Token B price by Token A price at the time of deposit. Then calculate the current price ratio in the same way. Divide the current ratio by the initial ratio to get r. Take the square root of r, multiply by 2, divide by (1 + r), and subtract 1. The result is a negative fraction representing your percentage loss relative to HODLing. For example, if r = 2 (meaning the price ratio doubled), IL = 2 * 1.414 / 3 - 1 = -5.72%. The dollar value of impermanent loss equals the HODL value multiplied by the absolute IL percentage.
To calculate the HODL value, assume your initial investment was split 50/50 by dollar value between the two tokens. Track how each token's price changed and compute the total value if you had simply held both. The LP position value equals the HODL value multiplied by (1 + IL). The difference between LP value and HODL value is your impermanent loss in dollar terms.
Worked Examples
Let us walk through three realistic scenarios to illustrate how impermanent loss works in practice with actual numbers.
Example 1: ETH/USDC Pool — ETH Price Increases 50%
You deposit $10,000 into an ETH/USDC pool when ETH = $2,000. The price ratio is 2000. ETH rises to $3,000 (ratio = 3000, so r = 3000/2000 = 1.5).
IL = 2 * sqrt(1.5) / (1 + 1.5) - 1 = 2 * 1.2247 / 2.5 - 1 = -2.02%. HODL value = $10,000 * (1 + 1.5) / 2 = $12,500. LP value = $12,500 * (1 - 0.0202) = $12,247. IL = -$253.
Example 2: ETH/USDC Pool — ETH Price Doubles
Same pool, but ETH goes from $2,000 to $4,000. Price ratio r = 4000/2000 = 2.
IL = 2 * sqrt(2) / (1 + 2) - 1 = 2 * 1.4142 / 3 - 1 = -5.72%. HODL value = $10,000 * (1 + 2) / 2 = $15,000. LP value = $15,000 * 0.9428 = $14,142. IL = -$858.
Example 3: ETH/USDC Pool — ETH Drops 75%
ETH crashes from $2,000 to $500. Price ratio r = 500/2000 = 0.25.
IL = 2 * sqrt(0.25) / (1 + 0.25) - 1 = 2 * 0.5 / 1.25 - 1 = -20.00%. HODL value = $10,000 * (1 + 0.25) / 2 = $6,250. LP value = $6,250 * 0.80 = $5,000. IL = -$1,250. This is a severe loss scenario.
Impermanent Loss by Price Change
This reference table shows impermanent loss at various price ratio changes for a standard 50/50 constant-product pool. Notice how IL accelerates non-linearly as price divergence increases.
| Price Ratio Change | Impermanent Loss | IL on $10,000 | Severity |
|---|---|---|---|
| 1.25x (+25%) | -0.62% | -$61.92 | Minimal |
| 1.50x (+50%) | -2.02% | -$202.04 | Moderate |
| 2.00x (+100%) | -5.72% | -$571.91 | Significant |
| 3.00x (+200%) | -13.40% | -$1,339.75 | Significant |
| 4.00x (+300%) | -20.00% | -$2,000.00 | Severe |
| 5.00x (+400%) | -25.46% | -$2,546.44 | Severe |
| 0.50x (-50%) | -5.72% | -$571.91 | Significant |
| 0.25x (-75%) | -20.00% | -$2,000.00 | Severe |
When to Use This Calculator
This impermanent loss calculator is designed for several key scenarios in decentralized finance decision-making.
- Before entering a liquidity pool: Estimate your potential impermanent loss based on expected price movements. Compare the projected IL against the pool's fee income to determine if providing liquidity is worthwhile.
- Monitoring an existing position: Track how price changes in your pool are affecting your position relative to HODLing. This helps you decide the optimal time to withdraw liquidity.
- Comparing different pools: Evaluate IL risk across multiple token pairs and fee tiers. A volatile pair with 1% fees might outperform a stable pair with 0.05% fees depending on volume.
- Educational purposes: Students and newcomers to DeFi can use this tool to build intuition about how AMMs work and why impermanent loss occurs before risking real capital.
Tips for Minimizing Impermanent Loss
While impermanent loss cannot be eliminated entirely in standard AMM pools, these strategies help reduce your exposure.
- Choose correlated pairs. Tokens that move together in price (like ETH/stETH or USDC/USDT) experience minimal price ratio changes, keeping IL near zero.
- Prioritize high-fee pools. Pools with higher trading volume relative to TVL generate more fee income, which can offset IL. Always check the actual fee APR, not just the advertised rate.
- Use concentrated liquidity wisely. On Uniswap v3 or similar platforms, setting a narrow price range increases fee efficiency but amplifies IL. Only concentrate liquidity if you actively manage your position.
- Monitor price divergence. Set alerts for when the price ratio moves beyond your comfort threshold. Withdrawing early can prevent small IL from becoming significant.
- Consider IL insurance protocols. Some DeFi protocols offer impermanent loss protection or insurance. Evaluate whether the cost of protection is justified by your pool's risk profile.
Frequently Asked Questions
About This Calculator
Free impermanent loss calculator for DeFi liquidity pools. Compare LP position value vs HODL, factor in trading fee income, and assess risk.
Frequently Asked Questions
How do I use the Impermanent Loss Calculator?
Enter your values in the input fields provided, and the calculator will automatically compute results in real-time. Start with the required fields (marked with labels), then adjust optional parameters to fine-tune your calculation. Results update instantly as you change inputs, allowing you to quickly compare different scenarios. For the most accurate results, use precise figures from official documents rather than rough estimates. If you are unsure about any input, hover over the field label for a brief explanation of what value to enter.
How accurate are the results from the Impermanent Loss Calculator?
This calculator uses standard industry formulas and up-to-date 2025 data to provide reliable estimates. Results are most accurate when you input precise, verified figures. Keep in mind that calculators provide estimates based on mathematical models — real-world outcomes may vary due to factors not captured in the inputs, such as market changes, policy updates, or individual circumstances. For high-stakes decisions, use these results as a starting point and consult with a relevant professional (financial advisor, doctor, engineer, etc.) for personalized guidance.
Can I save or share my Impermanent Loss Calculator results?
You can bookmark this page or take a screenshot of your results for future reference. To share results with others, copy the page URL — your specific inputs are not stored in the URL for privacy reasons, so the recipient will need to enter their own values. For record-keeping purposes, we recommend noting your inputs and results in a spreadsheet or document. This allows you to track changes over time and compare different scenarios side by side.
What formulas does the Impermanent Loss Calculator use?
This calculator uses industry-standard formulas that are widely accepted by professionals in this field. The specific mathematical relationships and constants are based on peer-reviewed research, government guidelines, or established industry practices. Where applicable, we reference the source methodology in the educational content below the calculator. If you need to verify a specific formula for professional or academic purposes, the calculation methodology section provides detailed breakdowns of each step.
Is the Impermanent Loss Calculator free to use?
Yes, this calculator is completely free with no registration required. We believe financial and analytical tools should be accessible to everyone. There are no hidden fees, premium features locked behind paywalls, or data collection requirements. You can use the calculator as many times as needed, compare unlimited scenarios, and access all features without creating an account. The tool runs entirely in your browser — your inputs are never sent to our servers or stored anywhere.