Crypto Yield Farming Calculator
Estimate the net return from a DeFi yield farming position after rewards, reward token price changes, and impermanent loss. Use it before committing liquidity to compare pools and strategies.
About this calculator
Yield farming earns returns by depositing crypto assets into a liquidity pool, which generates trading fees and often additional reward tokens distributed as an APY. The gross farming yield is: Gross Yield = liquidityAmount × (farmingApy / 100) × (farmingPeriod / 12). Reward tokens received are then adjusted for any change in their market price, multiplied by (1 + rewardTokenPrice). Impermanent loss is a hidden cost unique to automated market makers (AMMs): when the relative prices of the two pooled assets diverge, the pool rebalances in a way that leaves you with less value than simply holding the assets. The net formula is: Net Return = (liquidityAmount × (farmingApy / 100) × (farmingPeriod / 12)) × (1 + rewardTokenPrice) − (liquidityAmount × (impermanentLoss / 100)). A negative result means impermanent loss and reward token depreciation have cost more than the farming yield earned.
How to use
You deposit $10,000 into a liquidity pool with a 60% APY for 6 months. The reward token price has risen 20% (rewardTokenPrice = 0.20), and estimated impermanent loss is 5%. Gross yield = $10,000 × (60/100) × (6/12) = $10,000 × 0.60 × 0.5 = $3,000. Adjusted for reward token appreciation: $3,000 × (1 + 0.20) = $3,600. Impermanent loss = $10,000 × (5/100) = $500. Net Return = $3,600 − $500 = $3,100. Your $10,000 position earns $3,100 net over 6 months, a 31% return.
Frequently asked questions
What is impermanent loss in yield farming and how does it affect returns?
Impermanent loss occurs when the price ratio of the two assets in a liquidity pool changes from when you deposited them. The AMM algorithm rebalances the pool automatically, which means you end up holding more of the asset that fell in price and less of the one that rose — compared to simply holding both assets in your wallet. The loss is 'impermanent' because if prices return to their original ratio, it disappears, but if you withdraw while the divergence persists, it becomes permanent. High-APY pools often carry higher impermanent loss risk because they involve more volatile asset pairs.
How is yield farming APY different from traditional savings interest?
Traditional savings interest is paid in the same stable currency you deposited and is guaranteed by a regulated institution. Yield farming APY is paid in reward tokens that can themselves be highly volatile, and the rate advertised is typically an annualised snapshot that can change dramatically as more liquidity enters the pool or reward emissions adjust. Additionally, smart contract risk, protocol exploits, and impermanent loss have no equivalents in traditional savings. High stated APYs in DeFi frequently compress quickly as capital flows in, meaning early depositors capture most of the yield.
When does yield farming stop being profitable?
Yield farming becomes unprofitable when the combination of impermanent loss and reward token depreciation exceeds the gross yield earned. This is especially common in bear markets, where reward tokens — often the native governance token of the protocol — fall sharply in price while impermanent loss increases due to asset price divergence. Gas costs on Ethereum can also erode returns significantly for smaller positions. As a rule of thumb, frequently recalculate your net position as APY rates shift, and be prepared to exit a pool if reward token prices fall materially.