Definition
In cryptocurrency, a temporary loss in value for Crypto Liquidity Providers when the prices of deposited Tokens in a Crypto Liquidity Pool diverge due to market volatility, compared to simply holding the tokens outside the pool. This risk is 'impermanent' because it realizes only upon withdrawal, and can be offset by earned fees or rewards in DeFi protocols.
Crypto Impermanent Loss
In cryptocurrency, a temporary loss in value for Crypto Liquidity Providers when the prices of deposited Tokens in a Crypto Liquidity Pool diverge due to market volatility, compared to simply holding the tokens outside the pool. This risk is 'impermanent' because it realizes only upon withdrawal, and can be offset by earned fees or rewards in DeFi protocols.