ILCalc

What is impermanent loss?

Impermanent loss (IL) is the gap between holding two tokens inside a liquidity pool and simply holding them in your wallet. When you provide liquidity to an automated market maker (AMM) such as Uniswap, your deposit is split across the two tokens and the protocol constantly rebalances it as prices move — quietly selling whichever token is rising and buying whichever is falling to keep the pool balanced.

Do trading fees offset impermanent loss?

This is the question that actually decides whether providing liquidity was worth it — and most calculators ignore it. You come out ahead only if the fees and rewards you earn exceed your impermanent loss. Enter your pool's fee/reward APR and how long you stayed in, and the tool shows the net result plus the break-even APR: the annualized fee yield that would exactly cancel the IL over that period.

Uniswap V2 vs V3: which should an LP choose?

Neither is universally better — it depends on how much you expect the pair to move and how actively you can manage the position. V2 (or a very wide V3 range) is lower-maintenance and lower-IL, suited to volatile or unpredictable pairs you would be happy holding anyway.

How to choose a Uniswap V3 price range?

Match the range to the pair's volatility. Stable or highly-correlated pairs (USDC/DAI, ETH/stETH) can use very tight ranges safely; volatile pairs need wider ranges to avoid constantly falling out. Wider ranges = lower IL, fewer fees per dollar. Narrow ranges = more fees while in range, but larger IL and a real risk of going one-sided. Factor in gas and rebalancing.

How to reduce impermanent loss?

Correlated pairs (stablecoin/stablecoin, ETH/stETH) barely diverge, so IL stays tiny. Wider V3 ranges or weighted pools (e.g. Balancer 80/20) lower IL amplification. An 80/20 pool cuts a 2× move's loss from −5.72% to about −3.27%. High-fee, high-volume pools can out-earn the loss — always check the break-even above.