How to Use the Cryptocurrency Staking Reward vs. Impermanent Loss Risk Calculator

A Cryptocurrency Staking Reward vs. Impermanent Loss Risk Calculator helps investors compare the expected gains from staking tokens versus the potential losses from impermanent loss when providing liquidity in a decentralized exchange.

What This Calculator Does

When you stake tokens, you earn fixed or variable rewards over time. But when you provide liquidity (e.g., in an AMM like Uniswap), token price volatility can cause impermanent loss (IL)—a potential loss compared to simply holding your assets.

This calculator shows:

• Potential staking rewards over time
• The risk of impermanent loss based on token price change
• The effective value of your assets if you had provided liquidity instead
• Comparison to determine which option may be more profitable

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How to Use It

1. Enter the initial investment amount in USD.
2. Input the expected APY (annual percentage yield) of staking.
3. Specify the duration in months you plan to stake or provide liquidity.
4. Enter the estimated price change (%) of the token during that period. Use negative for a decrease, positive for an increase.
5. Click “Compare”.

You’ll see:

• How much do you earn from staking?
• The impermanent loss you’d experience in a liquidity pool.
• How much would your investment be worth if exposed to IL?
• The net benefit of staking instead.

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FAQ: Staking vs. Impermanent Loss Calculator

Q1: What is impermanent loss?
A: It’s the potential loss in value when providing liquidity to a pool due to price changes in the assets, compared to simply holding them.

Q2: Why compare staking with liquidity providing?
A: To make smarter yield strategies. Some prefer fixed, predictable returns from staking, while others chase higher but riskier returns from liquidity pools.

Q3: What does a negative price change mean?
A: It simulates a token losing value. For example, -30 means the token price dropped 30%.

Q4: Is this tool exact?
A: No. It provides an estimate based on simplified formulas. Real returns can vary due to gas fees, rewards structure, pool incentives, or slippage.

Q5: Should I stake or provide liquidity?
A: It depends on your risk tolerance. Staking is generally safer. Liquidity provision can offer higher returns but carries more risk.