lp calculator

What this LP calculator does

This lp calculator helps you estimate whether providing liquidity in a decentralized exchange pool outperforms simply holding the assets. The key concept is impermanent loss: when asset prices move, AMM rebalancing changes your token amounts, which can leave you with a lower value than a passive hold strategy.

In plain English: LP positions can earn trading fees, but those fees must offset impermanent loss to come out ahead. This page gives you a fast framework to compare both outcomes side by side.

How the math works (quick version)

Assumptions used

• Pool is a 50/50 constant-product AMM.
• Your initial deposit is split equally between token A and token B.
• Token B is treated as a stable value reference (USD terms).
• No external rewards are included unless represented via the APR field.

Core formulas

Let r = current price / initial price.

• HODL value = (Initial Deposit / 2) × (1 + r)
• LP value before fees = Initial Deposit × √r
• Impermanent Loss % = (LP Value / HODL Value − 1) × 100
• Estimated Fees = Initial Deposit × APR × (Days / 365)

Finally, the calculator combines LP value and estimated fees, then compares the result against HODL.

How to use this calculator correctly

1. Enter your initial total liquidity contribution in USD.
2. Input the token price when you entered the pool.
3. Input the current token price.
4. Add a realistic fee APR estimate based on actual pool history.
5. Set how long funds are (or were) in the pool.

Try multiple scenarios (up market, down market, sideways market). LP outcomes are highly path-dependent and vary by volatility and volume.

Interpreting your results

If impermanent loss is negative

Negative IL means the LP position underperformed HODL before fees. This is expected when the relative price diverges significantly.

If net vs HODL is positive

Great — your estimated fees were enough to compensate for IL and still deliver a higher final value than holding. This tends to happen in high-volume pools with moderate price divergence.

Break-even APR

The break-even APR output tells you the annualized fee rate required (over your chosen number of days) to match HODL. If your expected fee APR is above that line, LP may be favorable; below it, HODL may be better.

Common LP mistakes

• Using overly optimistic APR values from short time windows.
• Ignoring protocol risk, smart contract risk, and exploit risk.
• Forgetting gas costs, slippage, and tax impacts.
• Assuming impermanent loss always stays “impermanent.”

Final thoughts

A good lp calculator is less about predicting exact outcomes and more about improving decision quality. By comparing HODL vs LP with clear assumptions, you can avoid emotional entries and better manage risk. Use this tool as a decision aid, not financial advice, and always test conservative scenarios first.