What Is the Concept of “Divergence Loss” in Relation to Impermanent Loss?

"Divergence loss" is an alternative, more accurate term for impermanent loss. It emphasizes that the loss is caused solely by the price ratio of the tokens diverging from the initial ratio, rather than implying the loss is always recoverable (impermanent).

It clarifies that the loss is the difference between the value of the LP's portfolio and the value of simply holding the initial assets.