Impermanent loss
A liquidity position’s value shortfall compared with holding the deposited assets, caused by changing relative prices.
In more detail
When relative token prices move, an AMM changes the mix of assets in your position. That mix can be worth less than keeping the original amounts outside the pool. This comparison usually separates trading fees and rewards, which may offset some or all of it. The word impermanent doesn't promise the difference will disappear.
How you might use it
Your LP position earned fees, but after one token rose sharply you calculate that holding the original tokens would have been worth more.
- Short name
- IL
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