# Does Impermanent Loss Become Permanent upon Withdrawal from the Liquidity Pool? ⎊ Path

**Published:** 2025-12-05
**Author:** Greeks.live
**Categories:** Path

---

## Does Impermanent Loss Become Permanent upon Withdrawal from the Liquidity Pool?

Yes, the "impermanent" nature of the loss refers to the theoretical possibility of the token prices returning to their initial ratio before the liquidity provider withdraws. However, the loss is realized and becomes permanent the moment the liquidity provider removes their assets from the pool.

At withdrawal, the LP receives the current composition of the pool, which reflects the price divergence and thus the loss relative to simply holding the original assets. The term "impermanent" is only relevant while the assets are still staked.

- [Why Is the Loss Termed “Impermanent” If the Token Ratio Is Permanently Changed by Arbitrage?](https://learn.greeks.live/path/why-is-the-loss-termed-impermanent-if-the-token-ratio-is-permanently-changed-by-arbitrage/)

- [What Is the Difference between Impermanent Loss and Actual Realized Loss for a Liquidity Provider?](https://learn.greeks.live/path/what-is-the-difference-between-impermanent-loss-and-actual-realized-loss-for-a-liquidity-provider/)

- [What Is the Tax Reporting Challenge Posed by Impermanent Loss in DeFi Futures?](https://learn.greeks.live/path/what-is-the-tax-reporting-challenge-posed-by-impermanent-loss-in-defi-futures/)

- [What Are the Risks of Being a Liquidity Provider to a DAO’s Pool?](https://learn.greeks.live/path/what-are-the-risks-of-being-a-liquidity-provider-to-a-daos-pool/)

- [In What Way Do Derivatives like Perpetual Swaps Relate to Liquidity Pool Risks?](https://learn.greeks.live/path/in-what-way-do-derivatives-like-perpetual-swaps-relate-to-liquidity-pool-risks/)

- [Why Is the Loss Considered “Impermanent” and When Does It Become Permanent?](https://learn.greeks.live/path/why-is-the-loss-considered-impermanent-and-when-does-it-become-permanent/)

- [In What Scenarios Is Impermanent Loss Converted into Permanent Loss for a Liquidity Provider?](https://learn.greeks.live/path/in-what-scenarios-is-impermanent-loss-converted-into-permanent-loss-for-a-liquidity-provider/)

- [Is Impermanent Loss Ever Realized, and If So, When?](https://learn.greeks.live/path/is-impermanent-loss-ever-realized-and-if-so-when/)

## Glossar

### [Impermanent Loss](https://learn.greeks.live/area/impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

LiquidityRisk ⎊ Impermanent Loss quantifies the temporary divergence in value between holding assets in a decentralized liquidity pool versus simply holding those same assets in a non-interest-bearing wallet, resulting from price movements between the deposited pair.

### [Perpetual Swaps](https://learn.greeks.live/area/perpetual-swaps/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Definition ⎊ Perpetual swaps are a type of derivative contract, highly popular in cryptocurrency markets, that allows traders to speculate on the future price of an asset without an expiration date.

### [Initial Ratio](https://learn.greeks.live/area/initial-ratio/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Foundation ⎊ Initial Ratio, within cryptocurrency derivatives, fundamentally represents the proportional relationship established at contract inception between the underlying asset’s price and the derivative’s price, serving as a critical benchmark for subsequent valuation and risk assessment.

### [Opportunity Cost](https://learn.greeks.live/area/opportunity-cost/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Sacrifice ⎊ The concept of opportunity cost within cryptocurrency, options, and derivatives fundamentally represents the forgone benefit from selecting one strategy over another.

### [Liquidity Provider](https://learn.greeks.live/area/liquidity-provider/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Provision ⎊ A liquidity provider in cryptocurrency derivatives contexts furnishes capital to decentralized exchanges (DEXs) or automated market makers (AMMs), enabling trading by establishing bid-ask spreads; this process fundamentally addresses the inherent challenges of order book depth in nascent markets, and is critical for efficient price discovery.

### [Liquidity Pool](https://learn.greeks.live/area/liquidity-pool/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)

Pool ⎊ A liquidity pool, within the context of cryptocurrency derivatives and options trading, represents a centralized reserve of tokens locked in a smart contract, facilitating decentralized trading and price discovery.

## Discover More

### [When Does the Basis Theoretically Become Zero for a Standard Futures Contract?](https://learn.greeks.live/path/when-does-the-basis-theoretically-become-zero-for-a-standard-futures-contract/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![When Does the Basis Theoretically Become Zero for a Standard Futures Contract?](https://learn.greeks.live/wp-content/uploads/2025/10/Symmetrical-Bifurcation-Highlighting-Layered-Asset-Structures-in-Decentralized-Finance-Oracles.webp)

The basis theoretically becomes zero at the expiration date of the fixed-term futures contract.

### [In What Scenarios Is Impermanent Loss Converted into Permanent Loss for a Liquidity Provider?](https://learn.greeks.live/path/in-what-scenarios-is-impermanent-loss-converted-into-permanent-loss-for-a-liquidity-provider/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![In What Scenarios Is Impermanent Loss Converted into Permanent Loss for a Liquidity Provider?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Staking-Mechanism-Apex-Representing-Impermanent-Loss-Mitigation-in-Decentralized-Finance-Layer-Two-Solutions.webp)

Impermanent loss becomes permanent when the LP withdraws assets or if one of the pooled tokens suffers a catastrophic price collapse.

### [How Do Transactions in a Block Become Inputs for the Merkle Tree?](https://learn.greeks.live/path/how-do-transactions-in-a-block-become-inputs-for-the-merkle-tree/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![How Do Transactions in a Block Become Inputs for the Merkle Tree?](https://learn.greeks.live/wp-content/uploads/2025/10/Precision-Machining-of-Spindle-Assembly-Interfacing-with-High-Reflectivity-Digital-Asset-Ledger-Substrate.webp)

Transactions are individually hashed to form the leaves, which are then repeatedly paired and hashed to construct the tree structure.

### [What Is the Impact of a High Withdrawal Fee on an Inter-Exchange Arbitrage?](https://learn.greeks.live/path/what-is-the-impact-of-a-high-withdrawal-fee-on-an-inter-exchange-arbitrage/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is the Impact of a High Withdrawal Fee on an Inter-Exchange Arbitrage?](https://learn.greeks.live/wp-content/uploads/2025/10/Sleek-Dual-Nacelle-Structures-Approaching-Hyperspace-Jump-Vector-Overlaying-Digital-Asset-Settlement-Matrix.webp)

It acts as a fixed cost that can eliminate the small profit margin, especially for strategies requiring frequent capital movement.

### [Does Novation Occur Instantly upon Trade Execution?](https://learn.greeks.live/path/does-novation-occur-instantly-upon-trade-execution/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Does Novation Occur Instantly upon Trade Execution?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Biomorphic-Hull-Configuration-Representing-Cryptocurrency-Derivatives-Hedging-Strategies.webp)

Yes, for exchange-traded derivatives, it occurs almost instantaneously upon the matching and execution of the trade.

### [In an Options Contract, What State Changes Occur upon Exercise?](https://learn.greeks.live/path/in-an-options-contract-what-state-changes-occur-upon-exercise/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![In an Options Contract, What State Changes Occur upon Exercise?](https://learn.greeks.live/wp-content/uploads/2025/10/Asymmetrical-Digital-Asset-Custody-Apparatus-Encapsulating-Hedging-Instrument-Portfolio-Mechanics.webp)

The contract state changes to 'exercised'; the underlying asset is transferred from seller to buyer, and their respective balances are updated.

### [What Is 'Impermanent Loss' and How Does It Affect Liquidity Providers in the Network?](https://learn.greeks.live/path/what-is-impermanent-loss-and-how-does-it-affect-liquidity-providers-in-the-network/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![What Is 'Impermanent Loss' and How Does It Affect Liquidity Providers in the Network?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Exchange-Automated-Market-Maker-Tap-Interface-Aesthetics-Representing-Liquidity-Pool-Rebalancing-Mechanisms.webp)

The temporary loss for a liquidity provider when asset prices diverge; high IL deters LPs, reducing liquidity.

### [Can a Liquidity Provider Experience a Net Loss Even with Trading Fees Earned, Due to Impermanent Loss?](https://learn.greeks.live/path/can-a-liquidity-provider-experience-a-net-loss-even-with-trading-fees-earned-due-to-impermanent-loss/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Can a Liquidity Provider Experience a Net Loss Even with Trading Fees Earned, Due to Impermanent Loss?](https://learn.greeks.live/wp-content/uploads/2025/10/Decentralized-Finance-Asset-Custody-Mechanism-Revealing-Internalized-Derivative-Settlement-Infrastructure.webp)

Yes, if the dollar value of the impermanent loss from price divergence exceeds the accumulated trading fee revenue.

### [Why Is the Loss Considered "Impermanent" and When Does It Become Permanent?](https://learn.greeks.live/path/why-is-the-loss-considered-impermanent-and-when-does-it-become-permanent/?utm_source=crypto.greeks.live&utm_medium=referral&utm_campaign=satellite)
![Why Is the Loss Considered "Impermanent" and When Does It Become Permanent?](https://learn.greeks.live/wp-content/uploads/2025/10/Teal-Oblate-Spheroid-Interfacing-Complex-Black-Blade-Analogous-to-DeFi-Rebalancing-Mechanism.webp)

It is impermanent because the loss disappears if the token prices return to the original deposit ratio; it becomes permanent upon withdrawal.

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**Original URL:** https://learn.greeks.live/learn/does-impermanent-loss-become-permanent-upon-withdrawal-from-the-liquidity-pool/
