DeFi Yield Farming Calculator

Frequently Asked Questions

How is net farming APR calculated?

Net APR = swap-fee APR + reward-token APR − protocol fees − expected impermanent loss − gas drag. A pool advertising 40% APR with 12% expected IL and 3% gas drag is closer to 25% net before compounding.

How does APR become APY?

APY = (1 + APR/n)^n − 1, where n is compounds per year. A 30% APR auto-compounded daily gives APY ≈ (1 + 0.30/365)^365 − 1 ≈ 35.0%; weekly compounding gives ≈34.7%.

Is reward-token APR sustainable?

Often not. Many farms emit governance tokens that face sell pressure. Decline the APR as token price drops; track real-USD yield, not headline APR, and consider hedging the reward token.

What are the main risks?

Smart-contract bugs, oracle attacks, rug pulls, depeg events, and impermanent loss. Many “high APR” farms have lost 50–100% of TVL in single incidents. This tool is informational, not financial advice - never deposit more than you can lose.

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Estimates for informational purposes only.

Important Disclaimer: Estimates for informational purposes only.

This calculator provides estimates for informational purposes only. Results are based on assumptions and may not reflect actual outcomes. Consult qualified professionals in relevant fields before making important decisions based on these results.

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How This Calculator Works

DeFi yield farming layers several income and cost streams on top of a liquidity-pool deposit. This tool combines a base trading-fee APR (your share of the swap fees the pool earns) with an additional reward-token APR (emissions paid in the protocol's governance token), then subtracts a protocol fee (the cut the platform skims off the top, often expressed as a performance fee) and an expected impermanent loss drag based on how volatile you think the paired assets will be over the holding period. The remaining net APR is then compounded at the selected frequency to produce a realistic effective APY and a projected ending balance. Treat the APY as the headline number that lets you compare farms on an apples-to-apples basis - a 40% APR farm that compounds daily is genuinely different from a 40% APR farm that pays out only at unbond.

Formula / Method

Net APR = base APR + reward APR − protocol fee − expected IL. With n compounding periods per year and time t in years, the effective APY is (1 + r ÷ n)ⁿ − 1 and the ending balance is P × (1 + r ÷ n)^n×t. Selecting "None" uses the simple form P × (1 + r×t), appropriate when rewards are claimed and spent rather than restaked. Daily compounding closely approximates the continuous case P × e^r×t for the rates typical in DeFi.

Worked Example

Suppose you deposit $10,000 into an ETH–USDC pool advertising 8% trading-fee APR plus a 12% reward-token APR, with a 0.3% protocol fee and you forecast 2% IL over the year. Net APR is 8 + 12 − 0.3 − 2 = 17.7%. Compounded daily, the effective APY is roughly (1 + 0.177 ÷ 365)³⁶⁵ − 1 ≈ 19.35%, lifting $10,000 to about $11,935 after one year. If reward emissions are cut in half mid-year, the realized return will land well below the headline figure - a reminder that DeFi APRs are dynamic.

Common Mistakes

Quoting reward APR in token units while ignoring that the reward token itself can lose 50–90% of its price during emission.

Ignoring impermanent loss for volatile pairs - the headline yield can be entirely consumed by IL on a 2× move.

Forgetting gas costs of claiming and recompounding, which can outweigh small-deposit yield by 30–60%.

Assuming a fixed APR over a year; emissions, TVL, and trading volume all shift weekly.

Compounding rewards that auto-vest rather than auto-restake - vesting locks do not earn yield.

Tips & FAQ

For sticky yields, prefer pools where the bulk of the APR comes from genuine trading-fee revenue rather than inflationary emissions; the former scales with usage, the latter with token printing. Stablecoin–stablecoin pools (like USDC–USDT) carry near-zero IL and are the closest DeFi analog to a money-market fund, although they carry depeg and smart-contract risk. For volatile pairs, run the IL slider at 5–10% before deciding the farm is worthwhile. Always factor in withdrawal fees, performance fees, and the gas to enter and exit - on Ethereum mainnet a round-trip can easily exceed $50, which destroys the math on sub-$5,000 positions. This calculator is an educational estimate, not financial advice; DeFi protocols have lost users billions to exploits, oracle failures, and governance attacks. Never deposit more than you can afford to lose.

DeFi Yield Farming Calculator

Frequently Asked Questions

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