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How to Use the Calculator
- Value deposited: the total value of both tokens when you entered the pool.
- Pool weights: the weight of the token whose price changes, 50% in a standard two-token pool.
- Price change of that token: its move relative to the other token in the pair. In a pair with a stablecoin, this is simply the token’s own price change.
- Trading-fee APR: what the pool pays liquidity providers. This is the only thing that offsets the loss.
- Days in the pool: how long the position stays open.
How Impermanent Loss Is Calculated
Impermanent loss compares the value of the pool position with the value of simply holding the two tokens. In a 50/50 pool, the pool value divided by the hold value equals 2 × √k ÷ (1 + k), where k is the new price divided by the old price.
For example, $10,000 is deposited in a 50/50 pool and one token doubles in price. Holding would be worth $15,000. The pool position is worth about $14,142, because the pool sold part of the rising token on the way up. The gap of about $858 is an impermanent loss of 5.72%. A token that halves gives the same 5.72%.
How to Read the Result
- Value if held and value in pool: before fees, the pool value is the lower of the two for every price move.
- Fees earned: trading fees over your holding period at the APR you entered.
- Net vs holding: pool value plus fees, minus the value of holding. A positive number means providing liquidity paid off.
- Break-even fee APR: the fee APR needed over this period to cancel the loss. Compare it with what the pool pays.
What the Estimate Leaves Out
The loss is called impermanent because it shrinks if the price returns to where it started. It becomes permanent when you withdraw at a different price. The calculator models pools that spread liquidity across the whole price range. Concentrated-liquidity positions, such as those on Uniswap v3, lose more inside their range and stop earning fees outside it. Reward tokens, changing fee income, gas costs and the risk of a faulty smart contract are not included.
To compare with simply staking a token, use the staking calculator.