Example on a US$1,000.00 position
Value if heldUS$1,500.00
Value in poolUS$1,414.21
Lost to IL-US$85.79
Composition Shift
Held (50/50)
500.00 A
500.00 B
In AMM Pool
707.11 A
353.55 B
Impermanent Loss
-5.72%
Loss versus simply holding the two tokens in your wallet.
IL by Relative Price Ratio
IL depends only on the relative price change. If both tokens move by the same %, the ratio is 1× and IL is 0% — and IL is always negative (a loss) or zero, never a gain. Trading fees earned may offset it.