What’s The Total Amount Of Impermanent Loss On AMMs?

Impermax Finance
2 min readMar 14, 2021

Liquidity providers hate impermanent loss. It’s the most often given reason why people decide to stop providing liquidity on AMMs. All it takes is one instance of loss to eliminate months of yield gains, and that person may quit providing liquidity for good.

APY.vision has a handy table(above) that shows a running 24 hour tally of Impermanent loss across all pairs in the top AMM platforms.

Impermanent Loss Highlights

For example, according to this table, the USDC/WETH pair on Sushiswap showed an impermanent loss of $433,291 for its liquidity providers in the last 24 hours on trading volume of $51.6 million.

Total Losses

Adding together the losses for all pairs in the last 24 hours on Uniswap, Sushiswap, and Balancer, we get $8,571477 in impermanent losses for liquidity providers. This amount is steadily growing.

Projecting backwards against industry history, that’s about $700 million in total impermanent losses across the whole AMM industry since its beginning.

A Solution to Impermanent Loss

Impermax lets users supply funds to borrowers and earn yield when liquidity providers take loans against their LP tokens. Either the supplier (lender) earns returns (earned by the borrower, who is earning them from Uniswap) or if the loan is liquidated they get their loaned funds back in full. Either way, their funds are kept safe.

Indirect Liquidity Providing, Loss-Free

In this way, a lender can indirectly earn yield from Uniswap, and that yield is completely free of impermanent loss. The risk of loss is transferred to the borrower. Whether borrowing or lending, each party can choose the level of risk they are comfortable with, creating economic efficiencies that haven’t been possible before.

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Impermax Finance

We're developing a DeFi ecosystem that will enable investors to leverage their LP Tokens