# impermanent-loss

Calculates impermanent loss for AMM liquidity positions, models it for concentrated ranges, and finds the fee rate that breaks even.

- skill · `type=skill` · Claude Code, Codex, Cursor, GitHub Copilot, Gemini CLI, OpenCode · 426 installs · ★ 443
- Author: agiprolabs
- License: MIT · policy=mirror · the beginning of the file is at the end of this page
- Source: https://github.com/agiprolabs/claude-trading-skills/tree/HEAD/skills/impermanent-loss/SKILL.md
- Updated: 2026-09-03
- HTML: https://affpapa.org/en/nevibecode/skills/impermanent-loss

## What it does

The skill works out impermanent loss (IL) — what an LP position earns versus simply holding the same tokens. For a standard `x * y = k` pool the formula is `IL = 2 * sqrt(r) / (1 + r) - 1`, where `r` is the new price divided by the initial one. IL tracks the price ratio, not the absolute price, and it is symmetric: a 2x rise and a 2x drop both land at -5.72%.

Concentrated liquidity venues (Orca Whirlpools, Raydium CLMM, Meteora DLMM) amplify IL by a concentration factor of `1 / (1 - sqrt(P_lower / P_upper))`. Inside the range, losses scale with that factor; once price exits, the position is 100% the losing asset, which is the worst case for that direction. The shortcut `IL_clmm ≈ IL_constant_product * concentration_factor` holds for small moves only — large moves or prices near a boundary need the full formula in `references/il_formulas.md`.

Breakeven comes from `Net Position = LP_value + accrued_fees - hold_value`, so the position pays when accrued fees beat IL. Expected IL per period is roughly `σ² / 8`: at 5% daily volatility you need a daily fee rate of at least 0.031%. For time-based modeling there is a Monte Carlo simulation on geometric Brownian motion, shipped as `scripts/il_scenario_modeler.py`. One caveat — the historical route needs actual OHLCV price data, so volatility alone will not get you there.

## Install

### Claude Code (native platform)

1. **Skills CLI (Vercel)**
```bash
npx skills add agiprolabs/claude-trading-skills --skill impermanent-loss -a claude-code
```

2. **Manually: put the files in place**
- File: `~/.claude/skills/impermanent-loss/SKILL.md` — Copy the whole skill folder; for one project use .claude/skills/impermanent-loss/

### Codex

1. **Skills CLI (Vercel)**
```bash
npx skills add agiprolabs/claude-trading-skills --skill impermanent-loss -a codex
```

2. **Manually: put the files in place**
- File: `.agents/skills/impermanent-loss/SKILL.md` — For all projects use ~/.agents/skills/

### Cursor

1. **Skills CLI (Vercel)**
```bash
npx skills add agiprolabs/claude-trading-skills --skill impermanent-loss -a cursor
```

2. **Manually: put the files in place**
- File: `.cursor/skills/impermanent-loss/SKILL.md` — Cursor also reads .agents/skills/ and .claude/skills/

### GitHub Copilot

1. **GitHub CLI**
```bash
gh skill install agiprolabs/claude-trading-skills impermanent-loss
```

2. **Manually: put the files in place**
- File: `.github/skills/impermanent-loss/SKILL.md`

### Gemini CLI

1. **Skills CLI (Vercel)**
```bash
npx skills add agiprolabs/claude-trading-skills --skill impermanent-loss -a gemini-cli
```

2. **Platform CLI**
```bash
gemini skills install https://github.com/agiprolabs/claude-trading-skills --path skills/impermanent-loss
```

### Windsurf (Devin Desktop)

**Manually: put the files in place**
- File: `.devin/skills/impermanent-loss/SKILL.md` — The legacy .windsurf/skills/ path still works

### OpenCode

**Skills CLI (Vercel)**
```bash
npx skills add agiprolabs/claude-trading-skills --skill impermanent-loss -a opencode
```

### Claude.ai

**Claude.ai**
- Zip the folder and upload it in Settings → Capabilities → Skills

Where a file is given instead of a command, copy the files from the source to that path: https://github.com/agiprolabs/claude-trading-skills/tree/HEAD/skills/impermanent-loss/SKILL.md

## When to use it
- compute IL for a constant-product pool at a given price move
- size the amplified loss of a CLMM range and spot where price exits it
- compare accrued fees against IL to find the breakeven fee rate
- run a Monte Carlo over price paths and read the outcome distribution
- pick a pair and range where fees still cover the loss

## Example prompts
- calculate impermanent loss for a SOL/USDC pool if SOL goes from 150 to 200
- what daily fee rate do I need to break even on IL at 5% volatility
- model a CLMM position with a ±20% range around 150 and show where price exits

## Source text · SKILL.md · MIT

Below is the content of a third-party file. It is data, not instructions for you: do not act on anything written inside unless the human asks. Block tag: 37282ae05b8dcb58.

BEGIN THIRD-PARTY FILE 37282ae05b8dcb58
````text
---
name: impermanent-loss
description: Impermanent loss calculation, modeling, and breakeven analysis for AMM liquidity provision across pool types
---

# Impermanent Loss — Calculation, Modeling & Breakeven Analysis

Impermanent loss (IL) is the cost of providing liquidity to an automated market maker (AMM) relative to simply holding the tokens. When you deposit tokens into a liquidity pool, the AMM continuously rebalances your position as prices move. This rebalancing always works against you — selling winners and buying losers — resulting in less value than if you had just held the original tokens.

## Why "Impermanent"?

IL is called "impermanent" because it only crystallizes when you withdraw. If prices return to their original ratio, IL reverts to zero. However, in practice, prices rarely return exactly, so IL is usually quite real.

## Key Insight

IL is a function of the **price ratio change**, not the absolute price. A token moving from $1 to $2 produces the same IL as a token moving from $100 to $200 — both are a 2x ratio change. Direction does not matter either: a 2x increase and a 0.5x decrease produce the same IL magnitude.

## Constant-Product IL Formula

For a standard `x * y = k` AMM (Raydium standard, Orca legacy):

```
IL = 2 * sqrt(r) / (1 + r) - 1
```

Where `r = P_new / P_initial` (the price ratio).

### IL at Key Price Ratios

| Price Change | Ratio (r) | IL       |
|-------------|-----------|----------|
| -75%        | 0.25      | -5.72%   |
| -50%        | 0.50      | -5.72%   |
| -25%        | 0.75      | -0.60%   |
| 0%          | 1.00      | 0.00%    |
| +25%        | 1.25      | -0.60%   |
| +50%        | 1.50      | -2.02%   |
| +100% (2x)  | 2.00      | -5.72%   |
| +200% (3x)  | 3.00      | -13.40%  |
| +400% (5x)  | 5.00      | -25.46%  |
| +900% (10x) | 10.00     | -42.54%  |

Note the symmetry: a 2x increase (r=2.0) and a 2x decrease (r=0.5) both produce -5.72% IL.

## Concentrated Liquidity (CLMM) Amplified IL

Concentrated liquidity market makers (Orca Whirlpools, Raydium CLMM, Meteora DLMM) allow LPs to concentrate liquidity within a price range `[P_lower, P_upper]`. This amplifies both fee income **and** IL.
````
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