How can I calculate the IL for my crypto portfolio?

3 answers

• Dec 28, 2021 · 3 years ago
  Sure! Calculating the Impermanent Loss (IL) for your crypto portfolio involves comparing the value of your assets in a decentralized exchange (DEX) with the value they would have had if you had simply held them in your wallet. The formula to calculate IL is (1 - (x/y))^2, where x is the value of your assets in the DEX and y is the value of your assets if you had held them in your wallet. By plugging in the values, you can determine the IL percentage and assess the impact of providing liquidity in a DEX.
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• Dec 28, 2021 · 3 years ago
  Calculating IL can be a bit complex, but there are online calculators available that can make the process easier. You can simply input the details of your assets and the duration of your liquidity provision, and the calculator will give you the IL percentage. Some popular calculators include IL Calc and IL Wizard. These tools can save you time and effort in manually calculating IL and help you make informed decisions about your crypto portfolio.
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• Dec 28, 2021 · 3 years ago
  As an expert in the crypto industry, I can tell you that calculating IL is crucial for understanding the potential risks and rewards of providing liquidity in a decentralized exchange. It's important to note that different DEXs may have slightly different formulas or factors to consider when calculating IL. Therefore, it's recommended to use the specific formula provided by the DEX you're using or consult their documentation for accurate calculations. Additionally, keep in mind that IL is just one aspect to consider when evaluating the profitability of liquidity provision. It's essential to assess other factors like transaction fees, market volatility, and potential impermanent gains as well.
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