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Impermanent loss is a term commonly encountered in the world of decentralized finance (DeFi), especially when it comes to providing liquidity to an Automated Market Maker (AMM) like PulseX, a Uniswap V2 fork. When you supply assets to a liquidity pool, the prices of those assets can change as trading occurs. If the price of your deposited assets changes after you've added them to the pool, and you decide to withdraw them, you might find that the total value is less than if you had simply held onto the assets outside of the pool. This phenomenon is known as impermanent loss.
The Impermanent Loss Calculator is designed to help you estimate the potential loss you might incur due to these price shifts. Here's how to use it:
Original Price: Enter the price of each asset at the time you deposited them into the liquidity pool.
New Price: Enter the current price of each asset.
Calculate: The calculator will then estimate the impermanent loss as a percentage.
Example:Let's say you deposited 1 ETH and the equivalent value in USDC into a PulseX liquidity pool when 1 ETH was worth $2,000. If the price of ETH rises to $3,000 and you decide to withdraw your assets, you would receive more USDC and less ETH than you originally deposited, potentially resulting in an impermanent loss.
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