Impermanent Loss
Definition
The temporary loss of funds experienced by liquidity providers when asset prices diverge from the initial deposit ratio.
Example
Impermanent loss occurs when one token in a pair appreciates significantly.
Related Terms
Frequently Asked Question
What is Impermanent Loss in DeFi?
Impermanent Loss is the temporary loss of funds experienced by liquidity providers when the prices of deposited assets diverge from their initial ratio. The loss becomes permanent if you withdraw before prices revert.
APA Citation
Last updated:
· Source: VixShield Trading Glossary — From SPX Mastery by Russell Clark
⚠️ Not financial advice. This definition is educational content from the SPX Mastery book series by Russell Clark (VixShield). Past performance is not indicative of future results. Trading options involves substantial risk of loss and is not appropriate for all investors. Always paper trade before risking real capital.