Example 1
Given:Providing liquidity for a volatile pair like ETH and USDC during a bull run.
Rezultatas:Estimated fee earnings of $150, but an impermanent loss of $114, leaving a net profit of $36.
Shows how rapid price changes can eat into your trading fee profits.
Imagine you put $2,000 into an ETH/USDC pool (split as $1,000 of ETH and $1,000 of USDC). If ETH doubles in price (a ratio change of 2.0) while USDC stays at $1, your pool automatically sells ETH for USDC to keep the balance. If you withdraw now, your assets are worth $2,828 instead of the $3,000 they would have been worth if you just kept them in your wallet. That is an impermanent loss of $172. Luckily, if the pool had high trading volume, you might have earned $150 in fees, which helps soften the blow to a net difference of just -$22.
Example 2Conservative stablecoin-only scenario
Given:5000, 1.0
Rezultatas:Clean fee earnings of $125 with absolutely zero impermanent loss.
Perfect for low-risk, steady yield farming strategies.
In this scenario, you deposit $5,000 split evenly between two stablecoins like USDC and USDT. Because both tokens are pegged to the US dollar, their price ratio stays at a rock-solid 1.0. This means your risk of impermanent loss is 0%. If the pool generates $125 in fees over a month, every single penny of that fee income is pure profit. This is a favorite strategy for risk-averse savers who want to beat traditional bank interest rates without worrying about market crashes.
Example 3High-risk exotic token pairing
Given:1000, 5.0
Rezultatas:Fee earnings of $300 offset by a heavy impermanent loss of $255, resulting in a net profit of $45.
Always check if high APY percentages are worth the extreme price volatility.
Here, you put $1,000 into a highly volatile pool where a new meme token spikes by 5x relative to your other token. While the massive trading frenzy earns you an impressive $300 in fees, the extreme price shift triggers a 25.5% impermanent loss ($255). Your net profit is still positive at $45, but it shows how a massive price surge can make holding the token outright far more lucrative than putting it into a liquidity pool.