What Are the Mathematical Formulas Used to Calculate Impermanent Loss in a Concentrated Liquidity Position?

The formulas for calculating impermanent loss in a concentrated liquidity position are more complex than for a standard pool. They depend on the lower and upper bounds of the chosen price range, as well as the current price of the asset.

The calculation involves determining the value of the position if it were held in the pool versus the value if the assets were held outside the pool. Due to the complexity, most providers rely on specialized calculators or analytics dashboards to estimate their potential impermanent loss.