What impermanent loss actually is
When you deposit into a constant-product pool (Uniswap v2 style), arbitrage traders continuously rebalance your position — selling your winner and buying your loser. If the two assets drift apart in price, you end up with less value than if you'd left them in your wallet. The formula for a 50/50 pool is IL = 2√r ÷ (1 + r) − 1, where r is the change in the price ratio between the two assets.
How bad does it get?
IL is gentle at first and accelerates: a 1.25x ratio change costs about 0.6%, 2x costs 5.7%, 4x costs 20%, and 5x costs 25.5%. Note that it's the ratio that matters — if both assets double together, IL is zero. That's why stablecoin pairs and correlated pairs (ETH/stETH) carry far less IL risk than volatile/stable pairs.
Fees are the other half of the equation
Impermanent loss is only half the LP math — trading fees and incentive rewards accrue to your position the whole time. A pool earning 20% APR in fees can absorb a 2x divergence (−5.7%) and still come out ahead over a year. The deposit makes sense when expected fees exceed expected IL; this calculator gives you the IL side of that comparison.
How to use this calculator
Enter the price change for each of the two pooled assets since you deposited — as a percentage or a multiplier. The calculator works out the new price ratio between them, applies the 50/50 impermanent-loss formula, and reports how much less your LP position is worth than simply holding, alongside a reference table of IL at common ratio moves so you can see how the curve steepens.
A concrete 2x example
Suppose you provide liquidity to an ETH/USDC pool and ETH doubles while USDC stays flat — a price-ratio change of r = 2. Plug into the formula: IL = 2√2 ÷ (1 + 2) − 1 = (2 × 1.414) ÷ 3 − 1 = 0.9428 − 1 = −5.72%. Your position is worth about 5.7% less than if you'd just held the ETH and USDC in your wallet. Had ETH quadrupled (r = 4), IL deepens to −20%. Weigh that number against the fees and rewards the pool paid you over the same period to judge whether providing liquidity was worth it.