The loss a liquidity provider in an AMM pool experiences when the two pool tokens diverge in price. If you LP ETH/USDC and ETH price doubles, you end up with less ETH and more USDC than if you had just held — the difference is the impermanent loss. It is only “impermanent” if prices revert; if they do not, the loss is realised on withdrawal.
Impermanent loss
The loss a liquidity provider in an AMM pool experiences when the two pool tokens diverge in price. If you LP ETH/USDC and ETH price doubles, you end up with less ETH and more USDC than if you had just held — the difference is the impermanent loss. It is only "impermanent" if prices revert; if they do not, the loss is realised on withdrawal.
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