Risk
What is impermanent loss?
Divergence between holding the assets and pooling them.
- 01Two assets deposited
- 02Price diverges
- 03Pool rebalances
- 04Exit mix changes
Divergence, not a fee
Impermanent loss is the gap between holding the two assets and leaving them in a pool that constantly rebalances. If one asset trends, you tend to exit with more of the one that fell. Fees can offset that. They often do not.
It is not always temporary
The loss is ‘impermanent’ only if prices return before you exit. A vault that crystallises the position hands you the realised mix. Emissions can hide the divergence until they stop.
What a vault page should show
The pair, the range if concentrated, the fee tier, and whether the strategy is meant to stay in range. If those are unknown, an LP vault’s historical rate is not interpretable.
Digital assets and DeFi protocols are high risk. You may lose some or all of the assets you deploy. AltVaults DeFi provides software, data and informational tools. It does not provide investment advice, recommendations, brokerage, custody, fund management or guaranteed returns.