Impermanent loss

If the price ratio changes by a factor $r$ since you deposited into a volatile pool, your position compared with simply holding is:

$$\text{IL}(r) = \frac{2\sqrt{r}}{1 + r} - 1$$

Fees earned offset this loss. It is "impermanent" because it disappears if the price returns — but becomes real when you withdraw.

Stable pools have very low IL as long as the peg holds. If a peg breaks, LPs end up holding mostly the weaker asset. Neura AI flags pegged pairs whose price has drifted.