Glossary
Impermanent Loss
The opportunity cost an AMM liquidity provider takes on when the prices of the pooled assets diverge versus simply holding them.
When you deposit two tokens into an AMM and one of them moves in price, arbitrageurs rebalance the pool so the ratio matches the external market. The withdrawal value is then lower than if you had just held the two tokens in your wallet — the gap is impermanent loss.
It is called "impermanent" because the loss only crystallizes on withdrawal: if prices return to the deposit ratio, the gap closes. In volatile markets, IL frequently dwarfs the trading-fee yield that attracted the LP in the first place.