Essential Crypto Lingo: Impermanent Loss

Essential Crypto Lingo: Impermanent Loss. Impermanent loss is the temporary loss of funds while providing liquidity to a liquidity pool. It is the difference between the asset value traders would have if they just held their assets on an exchange or in a wallet, versus the asset’s value after contributing funds to a pool. Even with significant amounts of impermanent loss, it may still be profitable for liquidity providers to retain their assets in the pool because of the earnings generated from these fees.