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What Is ‘Impermanent Loss’ in the Context of DeFi Liquidity Pools?

Impermanent loss is the value difference between holding tokens in a pool versus holding them outside due to price changes.
Greeks.Live17.11.25

What Is ‘Impermanent Loss’ in the Context of DeFi Liquidity Pools?

Impermanent loss is the temporary difference in value between holding tokens in a liquidity pool versus simply holding them in a wallet. It occurs when the price ratio of the deposited tokens changes after deposit.

The loss is only "impermanent" because it can be reversed if the token prices return to their original ratio.

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