What is Impermanent Loss
Last updated
Last updated
In essence, impermanent loss is a temporary loss of value that occurs when providing liquidity. It will however become effectively permanent the moment liquidity is drawn from its pool. It’s often explained as the difference between holding an asset versus providing liquidity to that asset. Impermanent loss is usually observed in the most standard and common liquidity pools, to which the liquidity provider (LP) must provide both assets in a correct ratio and of which one is volatile in relation to the other.
The subject of Impermanent loss is discussed online ever since the first Automated Market Maker was introduced in the defi space in 2018.
Check out this impermanent loss calculator - https://dailydefi.org/tools/impermanent-loss-calculator/
Read through some IL resources:
