Liquidity Pool Returns Calculator
Estimate the trading fee returns you earn by providing liquidity to a decentralized exchange (DEX) pool. Ideal for DeFi investors evaluating whether a pool's APR justifies locking up capital for a given number of days.
About this calculator
When you deposit assets into a DEX liquidity pool, you earn a share of trading fees proportional to your stake, expressed as an Annual Percentage Rate (APR). The estimated return over a custom period is: Returns = poolValue × (poolAPR / 100) × (days / 365). This is a simple linear interpolation of the annual rate across your chosen number of days. Note that this formula does not account for impermanent loss — the reduction in your position's value relative to simply holding the tokens — which can significantly erode or even reverse gains in volatile pools. It also excludes compounding; if you reinvest rewards, actual returns will be higher. Use this calculator as a baseline estimate, then subtract expected impermanent loss for a more realistic net figure.
How to use
You deposit $5,000 into a liquidity pool offering 40% APR and plan to keep your position open for 90 days. Step 1 — Convert APR to a daily rate fraction: 40 / 100 = 0.40. Step 2 — Apply the time fraction: 90 / 365 ≈ 0.2466. Step 3 — Multiply: $5,000 × 0.40 × 0.2466 = $493.15 in estimated fee returns. Enter poolValue = $5,000, poolAPR = 40, and days = 90 to see the same result instantly. Remember to deduct impermanent loss if the token pair is volatile.
Frequently asked questions
What is impermanent loss and how does it affect liquidity pool returns?
Impermanent loss occurs when the price ratio of the two tokens in your pool changes after you deposit. The AMM rebalances your holdings, meaning you end up with more of the cheaper token and less of the more expensive one compared to simply holding both. If you withdraw during a period of high divergence, your USD value can be less than if you had never entered the pool. This calculator shows only fee income; you should estimate impermanent loss separately to judge your true net return.
How is APR different from APY in DeFi liquidity pools?
APR (Annual Percentage Rate) is the simple, non-compounded annual return — it is what this calculator uses. APY (Annual Percentage Yield) accounts for the effect of compounding, i.e., reinvesting your earned fees back into the pool. If you manually or automatically reinvest, your effective return is higher than APR suggests and closer to APY. For a 40% APR compounded daily, the APY is approximately 49.2%. Always check whether a pool advertises APR or APY to avoid overstating expected returns.
When is it worth providing liquidity to a DeFi pool?
Providing liquidity is most attractive when the pool APR comfortably exceeds both impermanent loss risk and the opportunity cost of holding the underlying assets. Stable-pair pools (e.g., USDC/USDT) have near-zero impermanent loss, making even a modest 5–10% APR worthwhile. Volatile pairs require higher APR to compensate for the risk. You should also consider smart contract risk, gas costs to enter and exit, and whether the APR is sustainable or inflated by short-term incentive programs.