Impermanent Loss Calculator
| Loss in dollars | - |
| Fees earned | - |
| Net vs holding | - |
You have just priced impermanent loss against the fees meant to cover it. Whether the fees actually do depends on where you are providing liquidity.
Every Thursday: where crypto yield actually is - stablecoins, liquid staking and DeFi lending, with the risk named next to the rate and what changed since last week.
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What impermanent loss actually is
Not a fee and not a hack. It is the gap between the value of a liquidity position and the value of simply holding the two assets. It appears whenever the two prices diverge, and it is called impermanent because it closes if prices return - and becomes permanent the moment you withdraw.
The numbers worth remembering
A 25% divergence costs about 0.6%. A 50% divergence costs about 2%. A 2x move costs about 5.7%. A 5x move costs about 25%. Small moves barely register, which is why stablecoin pairs carry so little of it and why volatile pairs can wipe out a year of fees in a week.
The comparison that matters
Fees against impermanent loss, not impermanent loss on its own. A pool paying 20% while its pair diverges 50% still beat holding. A pool paying 4% while the pair doubled did not. That comparison is the only reason to be in a liquidity position at all.