Impermanent Loss

DeFiUpdated: October 15, 2025

Also known as: IL, Divergence Loss

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Automated Market Maker (AMM)DeFi (Decentralized Finance)Flash Loan Liquid Restaking Liquid Staking Liquidity Pool MEV (Maximal Extractable Value)Wrapped Token Yield Farming

A temporary loss experienced when providing liquidity in DeFi due to price changes in paired assets

A temporary loss experienced when providing liquidity in DeFi due to price changes in paired assets.

Impermanent loss occurs when the price ratio of tokens in a liquidity pool changes compared to when they were deposited. The loss is "impermanent" because it only becomes permanent if you withdraw your liquidity at an unfavorable price ratio.

Related Terms

Liquidity Pool Yield Farming

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