Raydium impermanent loss: CPMM vs CLMM pools, and how to estimate it

Raydium runs two different kinds of liquidity pool, and they lose value to price moves in two very different ways. A standard CPMM pool spreads your capital across the whole price curve and follows the classic constant-product impermanent-loss formula. A CLMM (concentrated) pool packs your capital into a price range you choose — which lifts fee income but amplifies impermanent loss and can leave you holding only the weaker token. This guide covers both, with the formula, a worked table, and how to estimate IL for any Raydium pool.

First, the one-line definition

Impermanent loss is the difference between the value of a liquidity position and the value of simply holding the two deposited tokens, after their price ratio changes. It appears because an automated market maker (AMM) rebalances your position as the price moves, leaving you with more of the token that fell and less of the token that rose. It only becomes realized when you withdraw at a price ratio different from where you deposited.

Raydium's two pool types

Which formula applies to you depends entirely on which pool type you joined.

Raydium's CPMM is a pure constant-product AMM — its documentation describes the xy=k invariant directly (Raydium CPMM docs). Its CLMM is, in Raydium's own words, "inspired by Uniswap v3's design and adapted to Solana's account model," where "liquidity providers choose a price range rather than providing across the whole curve" (Raydium CLMM docs).

Impermanent loss on a standard (CPMM) pool

For a 50/50 constant-product pool, impermanent loss has a clean closed form:

IL = 2·√r / (1 + r) − 1

where r is the new price ratio of the two tokens divided by the ratio at deposit. The result depends only on how far the ratio moved, not on the direction. This is the same formula that governs Uniswap V2 pools (derivation: Peteris Erins, Auditless, 2020; original AMM model: Uniswap V2 whitepaper, 2020).

These are gross figures — before fees. Trading fees and RAY incentives accrue to LPs and can offset the IL drag, which is why the number that actually matters is net of fees, not the raw IL percentage.

Impermanent loss on a concentrated (CLMM) pool

CLMM is where Raydium LPs get surprised. When you concentrate liquidity into a range — say SOL/USDC between $160 and $250 — your capital inside that band behaves like a much larger position in a standard pool. That multiplies fee income, but it multiplies impermanent loss by the same logic. Two range-specific effects have no equivalent in a standard pool:

• Amplification. The tighter your range, the higher the effective leverage, and the more a given price move costs you relative to the standard-pool figures above.
• Going out of range. If the price leaves your band, your position converts entirely into the token that fell and stops earning fees. Raydium's docs note that "positions earn fees only when the price is in range."

The base 2·√r / (1 + r) − 1 formula no longer holds exactly for a concentrated position, because the outcome depends on your range boundaries as well as the price move. Concentrated liquidity was introduced by Uniswap V3 (Uniswap V3 whitepaper, 2021); the safest way to reason about it is to simulate the range rather than trust a single closed-form number.

How to estimate IL for your Raydium pool

You have three inputs that matter: the token prices when you deposited, the prices now (or a move you want to test), and — for CLMM — your range. The free TraderBear impermanent loss calculator handles Raydium specifically: paste a Raydium pool address and current prices auto-fill, or enter prices by hand. It computes the closed-form IL, runs 5,000 Monte-Carlo price paths so you see the distribution of outcomes rather than a single point, and reports LP-return-vs-HODL with Sharpe and net APR so fee income is weighed against IL. It runs entirely in your browser — no wallet connection, no signup.

FAQ