Decentralized Finance (DeFi)

Impermanent Loss

The shortfall a liquidity provider can face compared with simply holding the same tokens, when the prices of the pooled tokens move apart. It is "impermanent" only if prices later return, and fees may or may not make up for it.

General education, not investment, legal or tax advice. Markets and regulation change quickly: where a definition depends on current law or on a recent event, check the latest coverage before relying on it.