DeFi Yield Farming Calculator
Calculate potential yields and risks in decentralized finance yield farming strategies.
Essential Information
Initial investment amount
Annual percentage yield (can be very volatile)
How long to farm yield
Liquidity pool pair
Results
Enter values and click Calculate to see results
Methodology
This calculator uses compound interest formulas for APY calculations, impermanent loss modeling based on price divergence scenarios, leverage cost analysis including borrowing rates and liquidation risks, protocol-specific fee structures, and market scenario analysis. Risk assessments include smart contract risks, liquidity considerations, and tokenomics sustainability factors.
Important Disclaimers:
- DeFi yields are highly volatile and can change rapidly - past performance doesn't predict future results
- Impermanent loss can significantly reduce or eliminate profits in volatile markets
- Smart contract risks include potential bugs, exploits, and protocol failures
- Leveraged positions face liquidation risk during market downturns
- High APYs often indicate high risk or unsustainable tokenomics
- Regulatory changes could impact DeFi protocol operations
- Always verify current rates and risks on actual protocols before investing
About This Calculator
1. How does this DeFi Yield Farming Calculator work?
This calculator simulates DeFi yield farming returns using compound interest formulas, impermanent loss calculations, and risk adjustments. It correctly models yield sources (LP trading fees + protocol incentives), leverage costs, protocol take rates, gas costs, and market volatility scenarios. The calculator distinguishes between yield earned by LPs (trading fees) and small protocol take rates, providing accurate DeFi mechanics modeling.
2. What is impermanent loss and how is it calculated?
Impermanent loss occurs when the price ratio of tokens in a liquidity pool changes compared to simply holding the tokens. The calculator uses the formula: IL = 2 × √k/(1+k) - 1, where k is the price ratio change. For example, if one token doubles in price relative to another, you could lose up to 5.7% compared to just holding the tokens separately.
3. How accurate are the APY projections?
DeFi APYs are highly volatile and can change rapidly. The calculator provides projections based on your input APY, but actual yields may vary significantly due to: changing protocol incentives, market conditions, liquidity pool dynamics, and token price movements. Always verify current rates on the actual protocol before investing.
4. What are the main risks of yield farming?
Key risks include: 1) Impermanent loss from price divergence, 2) Smart contract bugs or exploits, 3) Liquidation risk with leveraged positions, 4) Token devaluation (reward tokens may lose value), 5) Regulatory changes, 6) Protocol governance risks, and 7) High gas fees eating into profits. The calculator models some but not all of these risks.
5. How does leverage affect my returns and risks?
Leverage amplifies both potential returns and risks. With 3x leverage, you borrow 2x your capital to increase position size, potentially tripling rewards but also tripling losses. The calculator includes borrowing costs and liquidation risk analysis. Higher leverage significantly increases the chance of liquidation during market volatility.
6. What results will I get from the calculator?
Results include: projected final portfolio value, net profit/loss after all costs, effective APY with compounding, impermanent loss estimates, liquidation risk assessment, yield breakdown by source, scenario analysis for different market conditions, and comprehensive risk analysis. All projections include realistic cost structures and risk adjustments.