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Quantitative Finance · Glossary

What is Impermanent loss?

Definition 20.6 Markets III: Commodities, Energy and Crypto · Chapter 20 — Automated Market Makers

The impermanent loss of a liquidity position is the difference between its value and the value of the tokens originally deposited, had they simply been held, after a price change; it is “impermanent” only in that it vanishes if the price returns to its starting level.

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