Strategies for Mitigating Impermanent Loss Across Uniswap V3 [Report]

Impermanent loss (IL) is the opportunity cost a liquidity provider faces when the net price difference between assets changes from the time they were first deposited. It is considered impermanent because liquidity providers can recover their loss if the token pair returns to the initial exchange rate.

While tracking impermanent loss is crucial for liquidity providers, it is an extremely tedious process, especially since its value may change after every action in a pool and considering that values must be normalized to a common denominator such as USD. Amberdata’s Uniswap v3 Impermanent Loss feature calculates fees, returns, and losses at the event level and takes liquidity distribution into account.

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