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In What Scenario Is Impermanent Loss Negligible for a Liquidity Provider?

Impermanent loss is negligible when the token price ratio remains stable, especially in stablecoin-to-stablecoin pools.
Greeks.Live20.11.25

In What Scenario Is Impermanent Loss Negligible for a Liquidity Provider?

Impermanent loss is negligible when the prices of the two tokens in the pool remain closely correlated or their ratio does not significantly change. This is most evident in stablecoin-to-stablecoin pools, such as USDC/DAI, where the price ratio is intended to stay near 1:1.

It is also minimal if the liquidity provider withdraws their funds before any substantial price divergence occurs.

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