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### Why is an Impermanent Loss Calculator Needed?

If you want to understand in detail how impermanent loss works with a detailed example, I recommend reading this Binance article. To understand where the impermanent loss calculator calculations come from above, you can read this Medium article.

Once you read those two articles, you’ll realize that a lot can happen over a year where the APR presented by DeFi exchanges may be inflated. The hope is to be able to make conservative assumptions showing how the change in prices over a year can impact overall profitability for providing liquidity.

If you have any suggestions to make this calculator better, please reach out to me on social media (I’ll see if I can incorporate the changes to make this a more useful free tool for everyone😊).

Impermanent Loss Calculator

### DeFi Impermanent Loss Calculator

To understand the potential impermanent loss vs. the potential gains by providing liquidity for a crypto pairing for a year. The constant product formula is used for calculations. Token "A" and "B" are just placeholders for the pairing you choose (For example CAKE and BNB).
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E.g. \$1000 investment would be \$500 of Token "A" and \$500 of Token "B".
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What is the yearly % that your crypto pairing is projecting to yield? Assumes yield + LP rewards.
This is the token you are getting paid with (could end up being the same token as "A" or "B") using the project APR%.

### Current Token Prices

Enter the current pricing of the tokens involved.
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### Future Token Prices

Enter the pricing of tokens in a year.
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*Assumes the same price as the current price (manually adjust if wanted).

### Current Token Amounts

*Section automatically calculated
*Assumes a 50/50 split.
*Assumes a 50/50 split.

### Future Token Amounts

*Section automatically calculated
*Assumes a 50/50 rebalance.
*Assumes a 50/50 rebalance.

### Summary

*Section automatically calculated
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