Impermanent loss, explained

An AMM position continuously sells the token that rises and buys the one that falls. If prices diverge from your entry, your position is worth less than simply holding the tokens — that gap is impermanent loss.

For a full-range position, a 2× price move costs about 5.7% vs HODL; a 4× move costs 20%. The loss is 'impermanent' because it vanishes if price returns — but it becomes permanent the moment you withdraw.

Concentrated ranges amplify IL: once price crosses your boundary, you hold 100% of the underperforming token. The IL Simulator shows the exact curve for any range width.

Educational content — not financial advice.