Web3 Impermanent Loss & Liquidity Pool Yield Forecaster
Worried About Impermanent Loss Wiping Out Your Yield?
Calculate exact impermanent loss percentages, fee earnings offsets, and net liquidity provider returns across volatile crypto asset pairs.
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👉View Master Tools IndexUnderstanding Impermanent Loss and Automated Market Maker Dynamics
Automated Market Makers (AMMs) like Uniswap, SushiSwap, and PancakeSwap rely on constant product liquidity pools (governed by the equation x × y = k). When an LP deposits equal values of two tokens into a pool, arbitrageurs continuously adjust the pool balance to reflect external market prices.
As asset prices diverge from their initial deposit ratio, the pool automatically rebalances by selling the appreciating token and buying the depreciating token. This divergence creates Impermanent Loss (IL)—the valuation difference between holding tokens inside a liquidity pool versus holding them statically in a wallet. The Web3 Impermanent Loss & Liquidity Pool Yield Forecaster computes exact IL values and compares them directly against accumulated trading fees.
Governing Mathematical Formulas
This client-side AMM simulator calculates divergence loss using the standard constant-product formula:
- Price Ratio (k):
k = 1 + (Price Change % / 100) - Impermanent Loss Factor (IL):
IL = [2 × √k / (1 + k)] - 1 - Impermanent Loss ($):
IL ($) = HELD Value × IL Factor - Trading Fees Earned ($):
Fees ($) = Initial Deposit × (Fee APY / 100) × (Days / 365) - Net LP Position Return ($):
Net Return ($) = (HELD Value + IL $) + Fees ($) - HELD Value
Worked Calculation Examples
Consider the default inputs loaded into this calculator:
- Initial LP Capital: $10,000.00
- Asset A Price Change: +100% (Token price doubles)
- Estimated Pool Fee APY: 25.0%
- Deposit Duration: 90 Days
When one asset doubles (+100%), the constant product curve incurs a -5.72% Impermanent Loss. Holding the tokens outside the pool would yield $15,000. Inside the pool, the base position is worth $14,428.00 (-$572.00 IL). Over 90 days at 25% APY, the pool generates +$616.44 in trading fees, yielding a Net LP Gain of +$44.44 above simply holding.
Frequently Asked Questions
1. Why is divergence loss called "Impermanent"?
The loss is considered "impermanent" because if the relative prices of the two pooled assets return to their original ratio before withdrawal, the divergence loss disappears completely.
2. When does impermanent loss become permanent?
Impermanent loss becomes permanent the moment a liquidity provider withdraws their assets from the pool, locking in the rebalanced token ratio at current market prices.
3. Which pool pairs carry the lowest impermanent loss risk?
Correlated pairs (such as stablecoin pools like USDC/USDT or liquid staking derivatives like ETH/stETH) experience minimal price divergence, resulting in virtually zero impermanent loss.
4. How do high trading volumes reduce impermanent loss impact?
High trading volume increases the total pool fee rewards distributed to LPs. When fee revenue exceeds impermanent loss drag, the net LP position yields higher overall returns than holding.
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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