Impermanent Loss Calculator
Estimate the impermanent loss (IL) for any AMM liquidity pool — Uniswap, Balancer, Curve, and more. This calculator compares your LP position value against simply holding, factors in fee income, simulates multiple price scenarios, visualizes the IL curve, and gives you an actionable risk score.
What Is Impermanent Loss in DeFi?
If you have ever provided liquidity to an automated market maker (AMM) like Uniswap, PancakeSwap, or Balancer, you may have noticed that your position is sometimes worth less than if you had simply held the same tokens in your wallet. That difference has a name: impermanent loss.
Impermanent loss (IL) occurs when the price of the tokens you deposited into a liquidity pool changes relative to each other after the deposit. The more the price diverges — in either direction — the greater the loss compared to just holding. The word impermanent is key: the loss is only realized if you withdraw your liquidity at the wrong time. If prices return to the original ratio, the impermanent loss disappears entirely.
This is one of the most misunderstood and underestimated risks in DeFi. Many new liquidity providers focus only on APR and trading fee income without ever modeling the IL exposure — and end up worse off than they would have been by simply holding.
How Does an AMM Cause Impermanent Loss?
AMMs like Uniswap maintain a constant relationship between the two tokens in a pool using a mathematical invariant. When traders buy one token, they push its price up inside the pool. Arbitrageurs then step in and rebalance the pool back to the market price — but in doing so, they change the ratio of tokens you hold. You end up with more of the token that went down in price and less of the one that went up. This rebalancing is what creates the gap between your LP value and your hold value.
Impermanent Loss Is Not Always a Loss
It is important to understand that IL is measured relative to holding — not relative to your original deposit. Even in a scenario where IL is significant, your position in USD terms can still be profitable if the overall market is up and trading fees are high enough. This is why every serious liquidity provider models both the IL and the expected fee income together before committing capital.
Which Pools Have the Highest Impermanent Loss Risk?
IL risk is highest in pools where the two tokens are uncorrelated and highly volatile relative to each other. The classic example is ETH/USDC — one token fluctuates wildly while the other is pegged to $1. Pools with two correlated assets (such as USDC/USDT or stETH/ETH) have dramatically lower IL because the price ratio rarely moves. This is why stablecoin pools on Curve Finance can offer fee income with near-zero impermanent loss.
Impermanent Loss Formula Explained
The IL formula depends on the type of AMM pool. Our calculator supports both the standard 50/50 Uniswap model and weighted pools like Balancer 80/20 or 60/40.
Standard 50/50 AMM (Uniswap v2 Model)
For a classic 50/50 pool, the impermanent loss formula is:
IL = ( 2 × √r ) / ( r + 1 ) − 1
Where r is the price ratio: current price divided by initial price. For example, if Token A doubled in price (r = 2):
- IL = (2 × √2) / (2 + 1) − 1 = 2.828 / 3 − 1 = −5.72%
This means your LP position is worth 5.72% less than if you had just held both tokens.
Weighted AMM Formula (Balancer Model)
For pools with non-equal weights (e.g., 80/20 or 60/40), the generalized formula is:
IL = rw / ( w × r + (1 − w) ) − 1
Where w is the weight of Token A (e.g., 0.8 for an 80/20 pool) and r is the price ratio. Heavier-weighted pools concentrate more capital in one token, which reduces IL exposure when that token outperforms. This is the formula our calculator uses for all pool configurations.
Hold Value vs LP Value
Hold Value = Capital × ( w × r + (1 − w) )
LP Value = Capital × rw
Impermanent Loss ($) = LP Value − Hold Value
Fee Offset Formula
IL does not tell the full story — fee income can partially or fully compensate for it:
Fee Income = LP Value × APR × ( Days / 365 )
Net Profit = LP Value + Fee Income − Hold Value
IL Reference Table
The table below shows how much IL you would experience at different price change levels in a standard 50/50 pool, so you can quickly gauge exposure without running calculations:
| Price Change | Impermanent Loss | APR Needed to Break Even* |
|---|---|---|
| ±25% | −0.60% | ~2.2% APR |
| ±50% | −2.02% | ~7.4% APR |
| ±100% (2x) | −5.72% | ~21% APR |
| ±200% (3x) | −13.40% | ~49% APR |
| ±400% (5x) | −25.46% | ~93% APR |
| ±900% (10x) | −42.46% | ~155% APR |
* Break-even APR estimated over 30-day holding period. Actual results depend on pool-specific fee rates.
How to Use the Impermanent Loss Calculator
This calculator is designed to give you a complete DeFi position analysis in under a minute. Here is a full walkthrough of every input and what each result means:
Step 1 — Initial Price of Token A (USD)
Enter the price of Token A at the time you added liquidity. For example,
if you deposited ETH when it was worth 2000, enter that value here.
Token B is assumed to be a stablecoin (e.g., USDC at $1) in the standard model,
but the formula applies to any two-token pair.
Step 2 — Current Price of Token A (USD)
Enter Token A's price right now, or a future price you want to model.
You can use this field for scenario analysis — for example, enter 4000
to see your IL if ETH doubles from your entry. The calculator will immediately
show you the IL and LP value at that price.
Step 3 — Initial Liquidity (USD)
Enter the total dollar value of your liquidity deposit. For example,
if you deposited $5,000 worth of ETH and $5,000 worth of USDC into a 50/50 pool,
enter 10000. This is the capital basis for all profit and loss calculations.
Step 4 — Token A Pool Weight
This field defines your pool type. Enter the weight of Token A as a decimal:
0.5— Uniswap v2, SushiSwap, PancakeSwap (standard 50/50)0.8— Balancer 80/20 (e.g., 80% ETH / 20% USDC)0.6— Balancer 60/40- Any value between 0.01 and 0.99 for custom pool configurations
The default is 0.5. Changing this value instantly recalculates
all results and redraws the IL curve chart with the correct weighted formula.
Step 5 — Pool Fee APR (%)
Enter the annual percentage rate of trading fee income for the pool.
You can find this on the pool's page in the protocol's interface (e.g., Uniswap Analytics,
Balancer app, or DeFiLlama). Leave at 0 to see raw IL without any fee offset.
With APR entered, the calculator shows whether fee income makes the position profitable
despite the impermanent loss.
Step 6 — Holding Period (Days)
Enter how many days you plan to keep your liquidity in the pool. This is used to calculate how much fee income you accumulate over time. A short-term position of 7 days with 50% APR collects very different fees than a 365-day position — and the calculator makes this comparison explicit.
Step 7 — Read Your Complete Results
After clicking Calculate, the tool returns a full analysis:
- Impermanent Loss % — exact IL percentage vs. holding
- Net Profit / Loss — final result after LP value + fees minus hold value
- LP Position Value — what your liquidity is worth after IL
- Hold Value — what you would have if you just held both tokens
- Fee Income — USD earned from trading fees over your holding period
- Risk Score — Low / Medium / High based on price move and pool weight
- Insights — plain-English analysis of your position health
- Scenario Simulation — IL and values across 7 price scenarios (−75% to +400%)
- IL Curve Chart — visual plot of IL across the full price range for your pool weight
4 Proven Strategies to Minimize Impermanent Loss
Understanding IL is step one. Managing it is where experienced LPs separate themselves from the crowd. Here are four strategies that work:
1. Choose Correlated Token Pairs
The single most effective way to reduce IL is to provide liquidity to pairs that move together. Stablecoin pairs (USDC/USDT, DAI/USDC) have near-zero IL because the price ratio almost never changes. Liquid staking pairs (stETH/ETH, rETH/ETH) are similarly low-risk. Reserve high-IL pairs (ETH/SHIB, BTC/altcoin) for pools with extremely high fee APRs that can justify the exposure.
2. Use Weighted Pools to Reduce Exposure
Balancer-style weighted pools let you skew your allocation toward the asset you are most bullish on. An 80/20 ETH/USDC pool keeps 80% of your capital in ETH, dramatically reducing the rebalancing effect that drives IL — while still earning trading fees on the pair. This is especially useful if you plan to hold the volatile token long-term regardless of whether you are providing liquidity.
3. Model the Break-Even APR Before Depositing
Before entering any pool, run your scenario through this calculator. Enter your expected price range, check the IL at the top of that range, then check whether the pool's current APR covers the IL over your planned holding period. If the break-even APR is 80% and the pool offers 25%, the position is likely to underperform a simple hold — no matter how attractive the APR looks in isolation.
4. Use Concentrated Liquidity Ranges (Uniswap v3)
Uniswap v3 allows you to concentrate your liquidity within a specific price range, earning much higher fees per dollar of capital — but only while the price stays within your range. If the price exits your range, you earn no fees and hold 100% of one asset (fully rebalanced). For v3 positions, always define a range that reflects your conviction on where price will trade, and model the IL at your range boundaries before committing.
Impermanent Loss vs. Fee Income: Which Wins?
The honest answer is: it depends entirely on the pool, the time horizon, and the price movement. Here is a simple mental framework:
- Low volatility + high fees (stablecoin pools, LST pairs): Fees almost always win. IL is minimal and fee income is steady.
- High volatility + low fees (new altcoin pairs with thin volume): IL almost always wins — and not in your favor. Avoid unless you understand the risk.
- High volatility + high fees (blue-chip pairs during bull markets): The outcome is uncertain. Model it. A 2x move creates ~5.7% IL. At 100% APR over 30 days, you earn ~8.2% — net positive. At 200% APR, you are comfortably ahead even after a 3x price move.
The key takeaway: never evaluate an LP position by APR alone. Always model the IL for your expected price range, calculate the fee income for your holding period, and only then decide whether providing liquidity outperforms simply holding.
Explore our complete suite of free crypto tools at All Tools — and always calculate before you commit capital.