What is Impermanent Loss in Crypto? (Animated + Examples)

Are you wondering what exactly Impermanent Loss means? In this video, we cover 2 easy to understand examples that explains the what causes impermanent loss when providing liquidity to a liquidity pool. There are many cryptocurrency topics that are difficult to grasp, but we hope to share some ideas that make understanding impermanent loss a little easier!

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[LRPMQLRPC]

Man, I dicovered your channel just one hour ago and I'm having a Whiteboard Crypto's video streak.

[renemacarthur]

it would be great if you included the fees that liquidity providers earn to show that providing liquidity doesn't always end in a loss

[briank]

Opportunity cost of being a liquidity provider earning fees vs owning crypto outright price appreciation

[krisssvilenov]

I'm liking every video you do, I want to support the channel because of the great work you are doing guys!

[magnustorfi]

I stumbled upon an absolute gem of a channel here, keep it up!!! When is the "how to reduce risk as a liquidity provider" video coming?

[thedeadmoneyallstars]

These playlists are a fantastic place to start in the world of crypto. Thanks for taking the time to put them together! Amazing doodle skills too! They really help demystify things for me!

Have shared the channel with a couple of friends and will see what I can do about sharing wider.

[puntawud]

Easy to understand and very clear. Thank you.

[yashalamwar]

Great jobs guys. I'm truly grateful for all that I have learned from your videos thus far and plan to act on it. Halfway through the video, I wondered how the trading fees could compensate for the impermanent loss. Good to see you even touched on that at the end.

[luisnegrete]

you are one of the best around!!!!... cheers from Mexico!!!! keep it up.

[---GOD---]

I don't understand how you can explain something so well.. time and time again..
I enter your videos completely lost and leave much more knowledgeable.

[toshbel]

It's a precious service that you're providing. Compliments. 💐

[pirayalueprasitsakul]

Thank you very much. The best I had found so far.

[debadri]

Daily dose of internet, lucaas and whiteboard crypto are the most no bs channels on youtube.

[XDJ-FreedmanAll]

number one, perfect explain, Thank you

[dollargifts]

Thanks. This was helpful. I was about to withdraw early from a pool.

[pablop]

Great explanation! Could you by using this video as a base to follow, explain the points to which the LP is triggering a tax event?
What needs to be tracked to assure accuracy in calculating the tax consequence?

Really great crypto channel, i wish you 1M followers soon, that would mean people want to learn something, apart from learning the hard way by losing their money while trading on sh..coins without any idea about crypto at all. Congratulations.

[thefuecisla]

Also, divergece loss or gains really needs to be put in context compararing the % of divergence against the fees and rewards that maybe offered by the pool protocol. I hope you pick up from here for future videos

[mammodde]

hi, this is a great video about impermanent loss! I just want to ask you something : what about the fees for the trades that the LP earns? maybe i'm blind but i think you didn't considered them at all, why is it?
I think they are a big part of why someone would be a LP, so the goal should be more like : impermanent loss < fees + new value of the liquidity pool.
let me know if I am missing something, and thank you again for your amazing content

[brenofabres]

at 2:52 you said the price GOAL is 110, 00... but if I spend 488 dollars to buy 4, 652ETH, my balance goes to ETH= 95, 37 priced at 104, 88usd, and balance USD=10488 priced at 0, 953usd. I didn't fully understand why the price goes to 110, 00 with that buy... And why did you used that amount of 488, 00? was it the price you should spend, given the circunstances, to make the AMM rebalance ?