Impermanent Loss Basics: The 2√r Formula
Educational IL worksheet: valueFactor = 2√r/(1+r); IL% = (valueFactor − 1)×100. Not a live pool simulator. This guide explains the worksheet in plain language. Educational only.
What This Worksheet Answers
For constant-product pools, value vs HODL ≈ 2√r/(1+r). IL% = (factor − 1)×100.
Educational worksheet, not a live quote
Educational worksheet only—not LP advice. Assumes the classic constant-product IL approximation; fees and multi-asset pools are omitted.
How to Run a Scenario
1
Step 1
Enter the new price ratio relative to entry (r > 0).
2
Step 2
Review value factor vs HODL and impermanent loss percent.
Formulas in Plain Language
Value factor vs HODL: 2√r / (1 + r). Classic two-asset approximation. IL percent: (valueFactor − 1) × 100. Negative when r ≠ 1.