Impermanent loss is a concept related to liquidity providing.

When depositing funds into a liquidity pool, two different cryptocurrencies are typically involved. Since these assets fluctuate in price independently, their ratio within the pool changes over time.

As a result, when withdrawing from the pool, liquidity providers may sometimes receive less of one cryptocurrency than they originally deposited due to these price movements.

This phenomenon is known as impermanent loss (IL).