The post What Is Crypto Impermanent Loss and How to Calculate It in 2025 appeared on BitcoinEthereumNews.com.

The impermanent loss in crypto is the temporary reduction in the value of your assets when you deposit them into a liquidity pool, compared to if you just held those same assets in your own wallet. Hence, it directly impacts liquidity providers (LPs) by reducing their potential returns, and even studies have shown that for over half of LPs in some major pools, the loss is actually higher than the trading fees they earn. To compensate liquidity providers, many DeFi protocols even distribute additional token rewards or trading fees. To minimize impermanent losses in DeFi, you need to use strategies like choosing stablecoin pools (ETH/WBTC), using correlated asset pairs, or opting for uneven liquidity pools. This guide will cover what impermanent loss is, how liquidity pools work with price divergence and token ratios, and the exact formula and calculators you can use to calculate it. What is Crypto Impermanent Loss? Impermanent loss is basically a risk you take on when you decide to provide liquidity to a decentralized exchange’s liquidity pool. You see, when you deposit your crypto tokens into a pool, you’re mainly becoming a liquidity provider (LP) there. Now, you know, this is how DeFi works, allowing people to trade tokens without needing any of the traditional middlemen, like a bank or a centralized exchange. So, what is impermanent loss? Well, the core of impermanent loss is simply the difference in value between the two scenarios: providing liquidity versus holding the assets yourself. It’s called “impermanent” because, theoretically, if the token prices eventually go back to where they were when you first deposited, the loss goes away. But, you know, crypto prices can be pretty volatile, so that’s not always a guarantee. Generally, this loss only becomes permanent if you decide to withdraw your tokens out of the…

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Filed under: News - @ November 17, 2025 7:28 pm