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Definition: impermanent loss


A paper loss that crypto liquidity providers have when the current market prices of their trading pair differs from the prices at the time they were deposited. Any such loss is only permanent when the assets are withdrawn from the liquidity pool. The more trading fees collected, the less impermanent loss, and there is no impermanent loss if the withdrawn tokens are the same price when originally staked. See crypto liquidity pool, crypto trading pair and yield farming.