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Category Crypto & Mining

⚙ Pool Configuration

Initial Deposit Value ($)

Asset A Symbol

Asset B Symbol

Token A Price

Start ($)

Future ($)

+50%

Token B Price

Start ($)

Future ($)

Est. Trading APR (%)

Duration Held (Days)

IL Curve Visualization Live

-50% Price Initial +500% Price

Impermanent Loss 0.00% $0.00

Fees Earned $0.00 0.00% Yield

Net Profit / Loss $0.00 0.00% ROI

If HODL $0.00

In Pool (Assets) $0.00

              In Pool (+Fees)
             $0.00
           

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About

Liquidity provision in Decentralized Finance (DeFi) offers high yields but carries a hidden structural risk: Impermanent Loss (IL). This occurs when the mathematical model of an Automated Market Maker (AMM) forces the sale of winning assets to buy losing assets to maintain a constant pool ratio. If the price divergence between deposited assets is significant, the net value of the liquidity position becomes lower than if the assets had simply been held (HODL).

This is not merely a theoretical risk. In high-volatility pairs, IL can exceed the yield generated from trading fees, resulting in a net negative return. This Advanced Impermanent Loss Engine allows you to model these scenarios with precision. It integrates Fee Yield Offsets, allowing you to calculate the "Break-even Days" - the time required for trading fees to cover the loss caused by price divergence.

Formulas

The standard Constant Product AMM formula is x ⋅ y = k. To determine the Impermanent Loss, we compare the value of the assets in the pool versus holding them outside the pool.

{

IL = 2 ⋅ √P_ratio1 + P_ratio − 1Net Position = (PoolValue + Fees) − HoldValue

Where P_ratio represents the price divergence of the pair relative to the deposit time. Note that IL is always negative (or zero). Profitability depends entirely on Fees > |IL|.

Reference Data

Price Divergence k	Impermanent Loss IL	Req. Fee Yield (to Break Even)	Asset Ratio Drift
1.25x (+25%)	0.62%	Low (Days)	44.7% / 55.3%
1.50x (+50%)	2.02%	Medium (Weeks)	40.8% / 59.2%
1.75x (+75%)	3.85%	High (Months)	37.8% / 62.2%
2.00x (+100%)	5.72%	Very High	35.4% / 64.6%
3.00x (+200%)	13.40%	Extreme	28.9% / 71.1%
4.00x (+300%)	20.00%	Unrecoverable?	25.0% / 75.0%
5.00x (+400%)	25.46%	Unrecoverable?	22.4% / 77.6%
0.50x (-50%)	5.72%	Very High	70.7% / 29.3%
0.25x (-75%)	20.00%	Unrecoverable?	81.6% / 18.4%
0.10x (-90%)	42.53%	Liquidated	91.5% / 8.5%

Frequently Asked Questions

The break-even point is the specific duration you must keep your funds in a liquidity pool so that the accumulated trading fees (and yield farming rewards) exactly equal the Impermanent Loss caused by price movement. If you withdraw before this point, you exit with a net loss compared to HODLing.

This tool models the standard "Full Range" (Uniswap V2 / SushiSwap / Balancer) curve. Uniswap V3 concentrated positions behave similarly but with "amplified" leverage. A 5% price move in a V2 pool might cause 0.1% IL, whereas, in a narrow V3 position, it could cause 100% IL if the price exits your range.

AMMs are designed to be "always liquid". As the price of Asset A rises, the pool automatically sells Asset A and buys Asset B along the curve. This means you end up holding less of the winning token and more of the losing token. This rebalancing is the root cause of Impermanent Loss.

Ideally, they don't. However, if one stablecoin "de-pegs" (drops below $1.00), the pool will treat it as a discount opportunity and buy it aggressively. If the coin collapses to zero, liquidity providers will be left holding 100% of the worthless coin and 0% of the valuable one.