Glossary / Impermanent loss

Impermanent loss

Impermanent loss is the value a liquidity provider gives up compared with just holding, when the two tokens in a pool change price relative to each other.

Why it matters

Pool fees need to outweigh it for providing liquidity to pay off.

Compare DeFi yields

Related terms

Liquidity poolA liquidity pool is a pot of two tokens locked in a smart contract that traders swap again…Yield farmingYield farming means moving crypto between DeFi apps to earn the highest rewards.…

Written by the VaultX AI team. Educational only, not investment advice.

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