Crypto Impermanent Loss & Liquidity Provision Forecaster
Providing Liquidity in DeFi? Calculate Your Impermanent Loss & Net Returns Instantly
Calculate impermanent loss percentages, compare liquidity pool values against holding, and evaluate fee yields across AMM pools.
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👉View Master Tools IndexUnderstanding Impermanent Loss in Automated Market Makers (AMMs)
Automated Market Makers (like Uniswap, Sushiswap, and PancakeSwap) rely on liquidity pools to facilitate decentralized token swaps. Liquidity providers (LPs) deposit equal dollar values of two tokens into a smart contract pool. However, when the relative price ratio between the deposited tokens diverges after deposit, the pool automatically rebalances, leaving LPs with a lower total valuation than if they had simply held the tokens in a crypto wallet.
This valuation difference is called Impermanent Loss (IL) because the loss remains unadjusted until the liquidity is withdrawn from the pool. If trading fees earned from swap volumes exceed the impermanent loss, liquidity provision remains net profitable. The Crypto Impermanent Loss & Liquidity Provision Forecaster computes your exact price divergence exposure and net liquidity returns.
Governing Mathematical Formulas
This client-side DeFi calculator computes impermanent loss using standard constant-product AMM ($x \times y = k$) equations:
- Price Ratio Change ($k_r$):
k_r = (1 + ΔA) / (1 + ΔB) - Impermanent Loss Ratio ($IL$):
IL = (2 × √k_r) / (1 + k_r) - 1 - Impermanent Loss Percentage:
IL (%) = IL × 100 - Holding Portfolio Value ($):
Holding Value = Initial Deposit × [0.5 × (1 + ΔA) + 0.5 × (1 + ΔB)] - Pool Value Before Fees ($):
Pool Value = Holding Value × (1 + IL) - Net Liquidity Value ($):
Net Value = Pool Value + Earned Trading Fees ($)
Worked Calculation Examples
Consider the default inputs loaded into this calculator:
- Initial Pool Deposit: $5,000.00 split 50/50 ($2,500 Token A, $2,500 Token B)
- Token A Price Change: +100% (2x price increase)
- Token B Price Change: 0% (Stablecoin or constant price)
- Earned Swap Fees: $350.00 accumulated during liquidity provision
Holding both tokens outside the pool yields $7,500.00 ($5,000 in Token A + $2,500 in Token B). The 2x price divergence incurs an Impermanent Loss of -5.72% ($429.17 loss). Adding $350.00 in trading fees results in a Net Pool Value of $7,420.83 USD.
Frequently Asked Questions
1. What is impermanent loss in Decentralized Finance (DeFi)?
Impermanent loss is the value difference between holding tokens in a liquidity pool versus holding them in a personal wallet when token prices diverge relative to one another.
2. Why is impermanent loss called "impermanent"?
It is called impermanent because if token prices return to their exact ratio at the time of initial deposit, the loss disappears entirely before withdrawal.
3. How can liquidity providers offset impermanent loss?
LPs offset impermanent loss by collecting swap trading fees, earning liquidity mining governance rewards, or pairing assets with high price correlation (like stablecoins or liquid staked tokens).
4. Does impermanent loss occur in stablecoin liquidity pools?
In pools containing correlated pegged assets (e.g., USDC/USDT or sETH/ETH), price ratios rarely diverge significantly, making impermanent loss near zero under normal market conditions.
5. Is this impermanent loss calculator private and secure?
Your inputs are not sent to our servers. All calculations execute locally in your browser using JavaScript logic. The page may still load standard third-party ad services.
Last updated: October 2026
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