Impermanent Loss Calculator — DeFi Liquidity Pool Risk

Enter the initial prices of Token A and Token B at the time you deposited into the liquidity pool, along with their current prices. Then enter your initial deposit in USD. The calculator assumes a 50/50 deposit split, which is the standard for Uniswap V2-style constant-product AMMs.

The tool computes the price ratio — how much Token A has moved relative to Token B — and applies the standard impermanent loss formula to give you the IL percentage. It then shows your estimated HODL value (what your tokens would be worth if you had simply held them) versus your LP value (what you actually have in the pool), along with the dollar difference.

Note: this calculator does not include trading fees earned by the pool. In practice, fee income can offset or even exceed impermanent loss for high-volume pools. Always factor in the pool APY from fees before deciding whether to provide liquidity.

Impermanent loss in a constant-product AMM (x · y = k) is determined entirely by the relative price change between the two tokens:

• Price Ratio (k) = (currentPriceA / initialPriceA) ÷ (currentPriceB / initialPriceB)
• IL% = (2 × √k / (1 + k) − 1) × 100
• HODL Value = (deposit / 2) / initialPriceA × currentPriceA + (deposit / 2) / initialPriceB × currentPriceB
• LP Value = HODL Value × (1 + IL% / 100)
• Dollar Loss = LP Value − HODL Value

The formula shows that IL is symmetric: a 2× price increase produces the same IL as a 2× price decrease. A price ratio of 1.0 (no relative change) produces zero impermanent loss. At a 4× price ratio, IL is approximately 20%; at 9× it reaches ~25%.

Example 1 — ETH/USDC Pool (ETH doubles)

• Initial ETH price: $1,000 | Initial USDC price: $1
• Current ETH price: $2,000 | Current USDC price: $1
• Deposit: $10,000 (50/50 split)
• Price ratio: 2.0×
• IL: ~5.72%
• HODL value: ~$15,000 | LP value: ~$14,142
• Dollar loss vs HODL: ~$858

In this scenario, simply holding ETH and USDC would have returned $15,000, while providing liquidity returns only ~$14,142 before fees. The pool auto-rebalances, selling ETH as it rises, which is why LP underperforms a pure hold in a bull market.

Example 2 — BTC/ETH Pool (BTC outperforms ETH 4×)

• Initial BTC: $30,000 | Initial ETH: $2,000
• Current BTC: $60,000 | Current ETH: $2,500
• Price ratio: (2× BTC gain) / (1.25× ETH gain) = 1.6×
• IL: ~3.08%

When both tokens appreciate but at different rates, the IL is lower than when one token is stablecoins. Providing liquidity in two correlated assets (like BTC/ETH) generally results in lower impermanent loss than token/stablecoin pairs.

When Is Providing Liquidity Still Profitable?

Impermanent loss only matters if it exceeds the trading fees earned. A Uniswap V2 pool with 0.3% fees and $10M daily volume on $1M TVL generates ~110% APY in fees alone. Even a 10% IL is easily offset. Evaluate the net APY = fee APY − IL rate before providing liquidity.