Start with the concept
impermanent loss is a concept needed to understand the relative price of the two assets deposited in a liquidity pool. A term alone cannot establish profitability or safety. Start by separating who holds the assets, which rules change the outcome, and what the user can actually control.
How it works
an automated market maker changes the pool balance according to a rule, so a large move in one asset leaves the provider with less of the asset that rose and more of the one that fell. A displayed estimate assumes conditions at one moment, so it should not be treated as identical to the final execution, settlement, or withdrawal result.
When risk increases
fees can offset part of the effect, but a volatile price path can still produce a worse result than simply holding the assets, and the comparison changes continuously rather than only at withdrawal. Consider separately the cases in which price moves, network congestion, shrinking liquidity, and a change in operating authority happen at the same time.
Interpret the numbers
Do not compare only a displayed yield or fee. Put trading costs, asset-price changes, taxes, conversion costs, and withdrawal restrictions on the same page. A number can describe a very different outcome depending on its period and reference asset.
What to verify
separate the asset pair, fee tier, trading volume, price range, and protocol reward; then examine the reward token price and any lock-up conditions. Match official documentation with the on-chain address first, and avoid connecting a wallet through search advertising or a link with a similar name.
A decision framework
The conclusion is straightforward: impermanent loss is a tool for reading structure, not a buy or sell signal. Do not connect an amount you cannot afford to lose; test the route and costs with a small amount before deciding whether it fits your custody and trading rules.