The difference in value between providing liquidity to an AMM pool versus simply holding the same assets, when relative prices diverge.
By Nadeem Ahmed·Updated 2026-09-18
As prices move, the pool rebalances your inventory. Versus HODLing, that can leave you with less total value — unless trading fees make up the gap.
The loss is “impermanent” only while you stay in the pool; exiting after divergence crystallizes it. Concentrated-liquidity designs need different models than classic constant-product pools.
The difference in value between providing liquidity to an AMM pool versus simply holding the same assets, when relative prices diverge.
As prices move, the pool rebalances your inventory. Versus HODLing, that can leave you with less total value — unless trading fees make up the gap.
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Updated 2026-09-18. Educational only — not financial advice. All terms