Impermanent loss in LP

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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.

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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:

  1. You have position in USDC/WETH Balancer v2 pool
  2. Clicking 14 days report gives you all rewards history (chart and table)
  3. You have $ 33,718 in USDC after rebalancing
  4. You have -$ 34,207 in wETH after rebalancing
  5. Total rewards are negative = $ 33,718 - $ 34,207 = - $ 488.75
  6. But the PnL is positive (due to ETH price growth) = $ 50,595

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