Impermanent loss in LP
Impermanent loss in DEXs happens when the price of tokens in a liquidity pool changes compared to their price at the time you deposited them. The bigger the price change, the bigger the impermanent loss compared to just holding the tokens.
Use the Lambda Analytics page to create a report for your LP position and track the total rewards history to identify impermanent loss. You can also check the total PnL which will include the price changes.
Rewards = Trading Fees - Impermanent Loss + Incentives
PnL = Rewards + Price growth - Price falls
In this video:
- You have position in USDC/WETH Balancer v2 pool
- Clicking 14 days report gives you all rewards history (chart and table)
- You have $ 33,718 in USDC after rebalancing
- You have -$ 34,207 in wETH after rebalancing
- Total rewards are negative = $ 33,718 - $ 34,207 = - $ 488.75
- But the PnL is positive (due to ETH price growth) = $ 50,595
Updated 2 months ago
