> For the complete documentation index, see [llms.txt](https://docs.ferroprotocol.com/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.ferroprotocol.com/fundamentals/what-is-impermanent-loss.md).

# What Is Impermanent Loss

Impermanent Loss is the difference between the value between just holding the tokens (HODL value) in your wallet and withdrawing your liquidity and receiving the tokens back. This is a potential risk for users who intend to become Liquidity Providers (LP).

Similar to other exchanges, Ferro Protocol provides transaction fees and farming rewards as the mitigation of Impermanent Loss and compensation for the risk experienced by Liquidity Providers.

If you want to learn more:

*  Check out this in-depth [article](https://medium.com/coinmonks/understanding-impermanent-loss-9ac6795e5baa) on Impermanent Loss
* Read up on the [Hybrid Invariant Model](/essentials/whitepaper/key-functionalities.md) adopted by Ferro for trading