DeFi Yield Farming APY Calculator
Convert base APR plus reward APR into a compounded APY, then estimate net yield after impermanent loss. Educational, not investment advice. Runs in your browser.
Trading-fee or lending yield.
Token incentives / liquidity-mining rewards.
Set to 0 for single-asset staking/lending.
APY converts a stated APR into the effective annual yield assuming rewards are harvested and recompounded: APY = (1 + APR/n)n − 1. Reward APR from token incentives is added to the base fee/lending APR before compounding. Impermanent loss — the value lost versus simply holding the two assets when their prices diverge — is subtracted as a rough adjustment; real IL depends on price paths and is not a fixed number. Reward-token prices can also fall, erasing yield. This is educational, not investment advice. Everything runs in your browser.
About this tool
Yield farming protocols advertise eye-catching returns, but the headline number is often a simple APR that hides two important effects: compounding and impermanent loss. This calculator decodes them. First it separates the two sources of yield most farms combine — a base APR from trading fees or lending interest, and a reward APR paid in the protocol's incentive token — and adds them into a total APR. Then it converts that APR into an APY (annual percentage yield) using the standard compounding formula, APY = (1 + APR ÷ n)^n − 1, where n is how often you harvest and reinvest. Compounding matters a lot at the high rates common in DeFi: a 50% APR compounded daily becomes roughly 65% APY. Finally, for liquidity-pool positions, it subtracts an estimate of impermanent loss — the value a liquidity provider gives up compared with simply holding the two tokens, which occurs whenever the pooled assets' prices diverge. Impermanent loss is not a fixed figure; it depends on how far and which way prices move, so the subtraction here is a rough scenario input rather than a prediction. Two caveats the tool is designed to surface: reward APRs are usually denominated in a volatile incentive token whose price can collapse, wiping out the advertised yield, and very high APRs often reflect very high risk. Treat advertised yields skeptically and size positions accordingly. This is educational and explicitly not investment advice. Everything runs in your browser; nothing is uploaded.
How to use it
- Enter the base APR — yield from trading fees or lending.
- Enter the reward APR — the token-incentive portion.
- Choose how often you compound (harvest and reinvest).
- Enter an estimated impermanent loss percentage (0 for single-asset staking).
- Read the compounded APY and the rough net APY after impermanent loss.
Frequently asked questions
- What is the difference between APR and APY in DeFi?
- APR is the simple annual rate without compounding. APY is the effective annual yield assuming you harvest rewards and reinvest them: APY = (1 + APR/n)^n − 1. Because DeFi rates are high and compounding can be frequent, APY can be substantially higher than APR.
- What is impermanent loss?
- Impermanent loss is the value a liquidity provider loses compared with simply holding the two tokens, caused by the pooled assets' prices diverging. It is "impermanent" because it reverses if prices return, but it becomes permanent if you withdraw while prices are apart.
- How is impermanent loss handled here?
- You enter an estimated impermanent loss percentage and the tool subtracts it from the APY for a rough net figure. Real impermanent loss depends on the price path of both assets and cannot be reduced to a single fixed number, so treat it as a scenario input.
- Why might a high advertised APR not translate to real returns?
- Reward APRs are usually paid in a volatile incentive token. If that token's price falls, the dollar value of the yield falls with it. High APRs also typically signal high risk, including smart-contract and liquidity risk.
- Should I set impermanent loss to zero?
- Use zero for single-asset positions like lending or staking, where there is no paired asset to diverge. For two-token liquidity pools, enter a non-zero estimate to reflect the risk.
- Is this investment advice?
- No. This is an educational tool with simplifying assumptions. DeFi carries significant risks. Nothing is uploaded; all math runs in your browser.