What is IL Shield?

Parametric impermanent loss protection for concentrated liquidity providers.

The problem

When you provide liquidity on Uniswap, PancakeSwap, SushiSwap, or any AMM, price movements cause your position to be worth less than simply holding the tokens. This is called impermanent loss (IL).

For concentrated liquidity positions (Uniswap v3/v4), the effect is amplified. A 20% price move on a concentrated range can cause 5-10x more IL than the same move on a full-range position.

The reality
Academic research estimates that over 50% of Uniswap v3 LPs have underperformed a simple buy-and-hold strategy. Fee income often does not compensate for IL during volatile periods.

How IL Shield works

1
Register your position
Connect your wallet, select your LP position from any supported DEX, choose a coverage tier (50%, 75%, or 100%), and deposit a USDC premium. The premium streams per-block, so you only pay for the time you use.
2
Keep earning fees normally
Nothing changes about your LP position. You continue earning trading fees on the DEX as usual. IL Shield operates as a peripheral overlay — it doesn’t touch your tokens.
3
Settle when ready
When you close your LP position or want to claim, IL Shield computes your impermanent loss using the entry price (recorded at registration) vs the exit price (from Chainlink oracle). If IL occurred, you receive a USDC payout. If not, your remaining premium is refunded.
Payout is automatic
USDC lands in your wallet. No claims process, no waiting period, no governance vote. The payout is computed on-chain using the exact Uniswap v3 math (same as the AMM itself) and settled in a single transaction.

Protocol architecture

Tranched underwriting

Claim payouts come from two USDC vaults. The Junior tranche absorbs losses first (first-loss position, higher yield). The Senior tranche is only drawn after Junior is fully depleted (last-loss, lower yield). This gives conservative depositors protection while rewarding risk-takers.

Oracle circuit breaker

Settlement uses Chainlink ETH/USD as the price oracle. If Chainlink and the pool’s TWAP diverge by more than 3%, settlement is automatically delayed to prevent price manipulation attacks.

Multi-DEX adapters

A single adapter contract reads position data from any Uniswap v3 fork. One contract serves Uniswap v3, PancakeSwap v3, SushiSwap v3, and Aerodrome — deployed with different constructor arguments per DEX.

Soulbound protection NFTs

Each protected position is represented by a non-transferable ERC-721 token (ILPN). This prevents secondary market speculation on protection contracts and ensures only the position owner can settle.

Coverage tiers

50%
Covers half your IL. Lowest premium.
75%
Covers three-quarters. Balanced choice.
100%
Full IL coverage. Maximum protection.

Supported DEXs

Protect LP positions on
U
UNI v4
U
UNI v3
P
PCS v3
S
SUSHI v3
A
AEROsoon

Security

252 automated tests (168 CI + 84 fork), 0 failures. ILMath fuzz-tested against a Python reference implementation for 10,000 runs.

Reentrancy guards on all state-mutating functions. ERC-4626 inflation attack defense via virtual share offset. Flash loan protection through TWAP + Chainlink oracle composition.

All governance parameter changes are timelock-protected (48 hours minimum on mainnet). Emergency pause available for immediate response.