DeFi Yield Farming ROI Calculator

What Is DeFi Yield Farming?

Decentralized finance (DeFi) yield farming is a strategy where you deposit crypto assets into smart contracts (such as liquidity pools or lending markets) to earn rewards. These rewards can come from trading fees, borrow interest, protocol incentives, or additional governance tokens. Your overall return depends on the yield rate, the time your funds stay in the protocol, and how often you compound rewards.

This DeFi Yield Farming ROI Calculator is designed to help you estimate your potential returns, expressed as both annual percentage yield (APY) and net profit over a chosen period. It does not connect to any protocol directly, so you can safely explore scenarios before committing real funds.

How This DeFi Yield Farming ROI Calculator Works

The calculator models how your crypto position may grow when yield is paid at a given rate and optionally compounded. You provide:

• Initial investment amount – the value of the assets you plan to deposit, usually denominated in USD or a stable reference asset.
• Nominal APY or APR – the rate advertised by the pool or protocol, expressed as a percentage.
• Time horizon – how long you expect to keep your funds in the strategy.
• Compounding frequency – how often rewards are reinvested into the position (daily, weekly, monthly, etc.).

Based on these inputs, the tool estimates your final balance and total profit. It assumes that the rate you enter remains constant and that rewards can always be reinvested without friction.

Core Formulas Used

For simple, non-compounding yield (similar to APR), the value of your position after a period is:

Final value = Initial investment × (1 + r × t)

where r is the annual rate as a decimal (e.g., 0.20 for 20%) and t is the time in years. For compounding yield, the standard formula is:

Final value = Initial investment × (1 + r / n)n × t

Here, n is the number of compounding periods per year (for example, 365 for daily, 52 for weekly, 12 for monthly). The effective APY that results from compounding an APR can be expressed in MathML as:

In this expression, r is the nominal annual rate and n is compounding periods per year. The calculator uses equivalent logic to translate your inputs into an estimated APY and projected final value.

How to Use the DeFi Yield Farming ROI Calculator

1. Enter your initial investment amount. This is the value you plan to deposit into the pool at today’s prices. You can think of it as the notional size of your position.
2. Provide the advertised APY or APR. Look at the protocol or aggregator you are considering and copy the current yield figure. If the platform labels it as APR, the calculator will convert it into an effective APY when compounding is enabled.
3. Choose your time horizon. Select how long you intend to keep the position open – for example, 30 days, 90 days, or 1 year.
4. Select a compounding frequency. If you expect to manually or automatically reinvest rewards daily, weekly, or monthly, use that interval. If you will not reinvest, set compounding to "none" or a single period.
5. Review the estimated results. The calculator will show your projected final balance, total profit, and implied APY over the chosen period under the stated assumptions.

Interpreting Your Results

Once you have entered your inputs, the calculator outputs:

• Final portfolio value – the estimated value of your position at the end of the period, assuming the rate and compounding behavior remain constant.
• Total profit – the difference between your final value and the initial investment amount.
• Effective APY – the annualized yield implied by your rate and compounding frequency.

Use these numbers as a way to compare strategies, not as guaranteed outcomes. Real-world DeFi yields can move significantly from day to day, and token prices can rise or fall independently of the yield itself.

Worked Example: Estimating Yield Farming Returns

Suppose you plan to deposit the equivalent of $5,000 into a liquidity pool that advertises a 25% APR and you expect to compound rewards monthly for one year.

• Initial investment: 5,000
• Nominal rate (APR): 25% (0.25 as a decimal)
• Compounding frequency: monthly (n = 12)
• Time horizon: 1 year (t = 1)

Using the compounding formula:

Final value = 5,000 × (1 + 0.25 / 12)12 × 1

That yields a final value of roughly 6,428. The estimated profit is therefore about 1,428 over the year, and the effective APY from monthly compounding is slightly higher than the original 25% APR. If you extend the time horizon to two years with the same assumptions, the compounding effect becomes more pronounced, and the calculator will show a higher final value and total profit.

Yield Farming vs Other Crypto Yield Strategies

Yield farming is one of several ways to earn a return on crypto holdings. The table below contrasts typical characteristics of common strategies. These are generalized examples for educational purposes only.

The calculator is most directly suited for DeFi yield farming and staking strategies where yields can be approximated as a percentage rate over time. You can still use it to approximate returns from centralized products if you know the advertised rate and whether interest compounds.

Assumptions & Limitations

Yield farming involves many variables that a simple calculator cannot fully capture. This tool makes several important assumptions:

• Constant yield: It assumes the APY or APR you enter stays constant over your chosen period. In reality, DeFi yields often change rapidly as more capital enters or leaves a pool.
• No token price changes: The model treats the value of your deposited assets and rewards as stable relative to your base currency. It does not account for token price appreciation or depreciation.
• No impermanent loss: For liquidity pools with volatile token pairs, impermanent loss can significantly impact real returns. This calculator does not simulate impermanent loss.
• No gas fees or slippage: Transaction costs, network congestion, and slippage when entering or exiting positions can reduce your net profit but are excluded from the estimate.
• Reinvestment always possible: When compounding is selected, the tool assumes you can reinvest all rewards instantly without cost or restrictions.
• Protocol reliability: The model does not consider smart contract bugs, governance attacks, oracle failures, or other protocol-level risks.

Because of these limitations, the ROI numbers you see should be viewed as simplified projections rather than precise forecasts. Always cross-check with protocol documentation and consider stress-testing scenarios using more conservative yield assumptions.

Risk Disclaimer and Use Cases

This calculator is for educational and illustrative purposes only and does not constitute financial, investment, or tax advice. DeFi yield strategies are highly speculative, and you can lose some or all of your capital. Past yields are not indicative of future performance, and on-chain risks can materialize abruptly.

Use this tool primarily to:

• Compare potential returns across different pools or protocols under standardized assumptions.
• Understand how compounding frequency affects your effective APY.
• Explore the impact of extending or shortening your time horizon on total profit.

Before committing funds, perform your own due diligence, review protocol audits and documentation, and consider your risk tolerance. If you are unsure, consult an independent financial professional familiar with digital assets.

Last updated: 2025. This methodology focuses on generic APY/APR math and does not endorse any specific protocol or asset.