mpermanent Loss Calculator: IL vs. Fees, the Full Ledger
August 5, 2026
4 min read
Impermanent Loss Calculator
What providing liquidity costs versus just holding, and whether the fees covered it.
Standard 50/50 constant-product pool math (Uniswap V2 style). Concentrated liquidity positions (V3 style) experience amplified IL inside their range. Excludes gas costs and assumes fee APR is constant, which it never is. Educational tool, not financial advice.
What impermanent loss actually is
Provide liquidity to a two-token pool and you’ve made a specific bet, whether you meant to or not: that the two tokens will roughly hold their price relationship.
When they don’t, the pool automatically sells the winner and accumulates the loser as prices move. That rebalancing is the entire mechanism of an AMM, and its cost to you has a name: impermanent loss. It’s the gap between what your position is worth and what simply holding the same tokens would be worth.
“Impermanent” because the gap closes if prices return to their starting ratio, and locks in the moment you withdraw. Frankly, it’s one of the worst-named concepts in crypto: for most positions the divergence never fully reverses, and the loss is only impermanent the way a fish is only temporarily out of water.
The shape of the math, in four numbers
IL depends only on how far the price ratio moved, not on direction. A 1.25x divergence costs about 0.6%. A 2x move costs 5.7%. A 4x move costs 20%. A 10x move costs over 42%. Small divergences are nearly free; big ones are brutal. This is why stablecoin pairs barely feel IL and why LPing a moonshot token against ETH can underperform just holding the moonshot by a huge margin.
And the part every “IL calculator” should say louder: IL is not the verdict, it’s half the ledger. Liquidity providers earn trading fees, and the honest question is never “how big was the IL” but “did fees beat it”. That’s why this calculator has the APR and days fields. A 5.7% IL in a pool paying 30% APR over a year was a winning trade. The same IL in a 4% pool was not.
When LPing tends to win, and when it doesn’t
The pattern from the math: LPing shines when prices chop sideways (minimal IL, fees keep printing) and in tightly correlated pairs. It suffers when one asset trends hard in either direction, which unfortunately describes the exact moments crypto is most exciting.
So the honest framing before entering any pool: you’re trading upside in the winner for fee income. In a raging bull trend, LPs systematically underperform holders. In a boring, high-volume chop, LPs quietly outearn everyone. Know which market you think you’re in, and remember that everyone thinks they know.
One more cost this calculator can’t see: smart contract risk. A pool is code holding your money, and the same caveat we apply to liquid staking applies double in DeFi. Audited, battle-tested pools only, sized like the position sizer taught you.
FAQ
What causes impermanent loss?
Price divergence between the two pooled tokens. The AMM continuously rebalances by selling the appreciating token and buying the depreciating one, so your position ends up with less of the winner and more of the loser than if you’d held. The size of the loss depends only on how far the price ratio moved.
How much impermanent loss does a 2x price move cause?
About 5.7% versus holding, in a standard 50/50 pool. A 1.5x move costs roughly 2%, a 4x move about 20%, and a 10x move over 42%. Direction doesn’t matter; only the divergence does.
Can fees make up for impermanent loss?
Yes, and that’s the entire LP business model. High-volume pools with meaningful fee APRs routinely out-earn their IL in sideways markets. The comparison fails in strong trends, where divergence grows faster than fees accrue. This calculator’s net-vs-HODL figure shows exactly which side won for your inputs.
Do stablecoin pairs have impermanent loss?
Almost none, as long as both pegs hold: two assets pinned near $1 barely diverge, so stable-stable pools are essentially pure fee income. The catch is the tail risk: if one stablecoin depegs, the pool mechanically loads you up on the failing asset. Terra’s collapse turned “safe” UST pools into bags of a dying token.
Is impermanent loss worse in concentrated liquidity (Uniswap V3 style) positions?
Yes, meaningfully. Concentrating liquidity in a narrow price range amplifies both fee earnings and IL: inside the range you earn more, but divergence hurts more, and outside the range you hold 100% of the losing side. This calculator models the classic 50/50 full-range pool; treat its IL figure as the floor for a concentrated position, not the estimate.
