What Are the Primary Differences between Impermanent Loss in a 50/50 Pool versus a Multi-Asset Pool?

In a standard 50/50 pool, impermanent loss is driven by the price divergence between two assets. In a multi-asset pool (e.g.

Balancer), the loss is distributed across multiple assets. This diversification can dampen the impact of a single volatile asset, as the loss is calculated against the weighted average price change of the entire basket.

However, it also introduces complex, multi-dimensional exposure, where the correlation between all assets in the pool determines the overall risk profile and potential for loss.