Crypto Impermanent Loss Calculator

What is impermanent loss?

Providing liquidity in a decentralized exchange can look simple on the surface: you deposit two tokens into a 50/50 automated market maker (AMM) and earn fees when people trade. But when prices move, the pool automatically rebalances your token mix. That change in mix can make your position worth less than if you had simply held the two tokens outside the pool. The difference between the liquidity provider value and a basic HODL value is called impermanent loss. This calculator makes that concept easy to see by turning a price change into a clear percentage and value comparison.

In a constant-product AMM (like Uniswap v2), the pool keeps the product of the two token reserves constant. When Token A rises in price relative to Token B, arbitrage trading removes some Token A and adds more Token B until the pool reflects the new market price. You end up with fewer of the token that went up and more of the token that went down. Impermanent loss is the gap that results from that rebalancing. It is called “impermanent” because if prices return to the starting ratio, the loss disappears. In practice, many users weigh this against swap fees earned, liquidity mining rewards, and time spent in the pool.

How to use this impermanent loss calculator

1. Enter the starting price and the new price for Token A relative to Token B.
2. Enter your deposit size, assuming a 50/50 split between the two assets.
3. Click calculate to see the impermanent loss percentage, LP value, and the HODL comparison.
4. Adjust the price change to test different market scenarios or volatility levels.

The results show how much a liquidity position would trail a simple hold strategy for the same starting amounts. A negative IL percentage means the LP position underperforms HODL by that percent. If fees earned are greater than the difference, the liquidity position can still end up ahead overall.

Assumptions in this calculator

• Two-asset, 50/50 constant-product pool (no fees included).
• Token B is treated as the quote asset (often a stablecoin), and price change is Token A vs Token B.
• Outputs compare the LP position to holding the same starting amounts outside the pool.

Real-world examples

If you provide liquidity to an ETH/USDC pool and ETH rallies, your pool position shifts toward USDC, which can lead to impermanent loss relative to holding ETH and USDC separately. If ETH falls, the same effect happens in reverse. Traders and LPs use impermanent loss calculations to decide when fees and rewards are likely to offset the loss, to compare volatile pairs versus stable pairs, and to estimate how much price movement their strategy can tolerate.

This is an educational tool. Real pools may include swap fees, dynamic rewards, different weighting, and smart contract risks. Always confirm assumptions and understand the full risk profile before providing liquidity.