Impermanent Loss Hedger

WHAT IT DOES

Impermanent Loss Hedger lets you hedge impermanent loss risk on your concentrated liquidity positions by opening a hedging position—such as a perpetual or options position—that offsets potential losses from price divergence. Instead of manually calculating the required hedge size and executing separate transactions, you provide your LP position details, specify the hedge size as a percentage of your position value, and the tool calculates the optimal hedge amount and executes it in one batched transaction. This is essential for LPs who want to protect their positions from adverse price movements while still earning fees from their liquidity.

HOW TO USE

Connect your EVM wallet and select the network. Enter the NonfungiblePositionManager contract address and your LP token ID. Enter the hedging protocol contract address that supports the asset pair. Set the hedge size as a percentage of your position value (e.g., 50% to hedge half of your exposure). Click "Check position" to verify ownership and view your position details—the tool displays the token pair, fee tier, tick range, and liquidity. Click "Calculate hedge" to estimate the required hedge amount based on your position. Review the results, then click "Execute hedge" to open the hedging position in a single transaction.

TECHNICAL MECHANISM

The tool first verifies ownership of the LP position and reads its details using the NonfungiblePositionManager's positions() function. It then calls the hedging contract's getHedgeAmount() function, which calculates the optimal hedge size based on the position's token amounts, liquidity, tick range, and the current pool price. The hedging contract uses this data to determine the notional value of the position and the required hedge size to offset impermanent loss. The executeHedge() function opens the hedging position—typically a perpetual swap or options position—on the hedging protocol, using the calculated amount. The tool uses receipt.effectiveGasPrice for accurate gas reporting and provides progress feedback during the process.

WHAT IT CANNOT SEE

This tool cannot hedge positions that are not owned by the connected wallet—ownership is verified before proceeding. It relies on the hedging protocol supporting the specific interface and asset pair; protocols that do not support the token pair or use non-standard interfaces are not supported. The tool cannot guarantee that the hedge will perfectly offset impermanent loss—hedging involves basis risk, funding rates, and other factors that may cause the hedge to deviate from the ideal offset. It also cannot guarantee that the hedge will be profitable—it is a risk management tool, not a profit-generating strategy.

PLEASE NOTE

Hedging impermanent loss involves opening a separate position on a derivatives protocol, which may have its own fees, funding rates, and liquidation risks. Ensure you understand the hedging protocol's mechanics before executing. The hedge contract must be trusted; verify its security and audit status before use. This tool is for EVM chains only and does not support non-EVM networks.