Impermanent Loss When Price Drops by Half (0.5x)
When one asset halves in price (0.5x ratio), impermanent loss is approximately 5.7%, symmetric with a 2x gain.
How to use this tool
- Determine the price ratio: divide the token's current price by its price when you deposited.
- Enter the price ratio (e.g. 2 if the token doubled, 0.5 if it halved).
- Read your impermanent loss percentage and how your LP position value compares to simply holding.
Calculate impermanent loss when one token in your liquidity pool loses half its value.
Frequently asked questions
- What causes impermanent loss?
- AMM pools (like Uniswap) rebalance automatically via arbitrage. When a token's price changes, the pool sells the appreciating token and buys the depreciating one, leaving you with fewer of the winner compared to just holding.
- Is impermanent loss permanent?
- Only when you withdraw. If the price returns to your deposit price, IL disappears. Trading fees earned while providing liquidity can offset IL, depending on pool volume.
- Why is the formula symmetric for 2x and 0.5x?
- IL depends only on the magnitude of the price ratio change. A 4x increase and a 0.25x decrease (both a factor of 4) produce the same 20% impermanent loss.