DeFi Yield Calculator

What a liquidity pool really earns once impermanent loss and costs are counted. Put ₹1,00,000 into an ETH and USDC pool paying a 15% fee APR and a 10% reward APR for 180 days. If ETH rises 50%, fees and rewards bring ₹12,329, but impermanent loss costs ₹2,526 and gas ₹2,000, so the pool beats holding by ₹7,803: a real yield of 15.82% a year against the 25% shown. It keeps beating holding while ETH moves between −70.24% and +111.56%.

The value you lose by holding two tokens in a pool rather than in your wallet, when their prices move apart. The pool keeps half its value in each, so it sells the token that rises and buys the one that falls. If one doubles against the other, you have 5.72% less than holding; at five times, 25.46% less. It is called impermanent because it shrinks again if the prices return to where they started, but it becomes permanent when you withdraw.

Because the APR does not include impermanent loss, costs or the price of what you are paid in. A big move between the two tokens can cost more than a year of fees. Reward tokens are often sold by other farmers as fast as they are paid, so their price can fall. Gas for depositing, harvesting and withdrawing adds up on small amounts. And APRs fall as more money joins the pool. Check the range of price moves that still pays before you deposit.

Fee APR comes from traders using the pool: each swap pays a small fee that is shared among depositors, so it is real income that rises with trading. Reward APR comes from the protocol issuing its own token to attract deposits; it is paid in that token, often falls as the token’s price drops, and usually ends when the incentive programme does. Enter them separately to see how much of your yield depends on rewards.

It works for 50/50 pools that keep an equal value of both tokens, such as Uniswap v2, SushiSwap and PancakeSwap v2. Concentrated-liquidity pools such as Uniswap v3 earn more fees inside your price range but suffer larger impermanent loss, and stop earning outside it. Weighted pools such as 80/20 lose less. A pool of two stablecoins has almost no impermanent loss while both hold their peg. Single-coin staking has none: use the Staking Rewards Calculator.

There are no rules written for DeFi, so treatment is unsettled. Rewards and fees are usually treated as income when received, at your slab rate plus cess. Swapping tokens to enter or leave a pool may itself be a transfer of a virtual digital asset, with any gain taxed at 30% plus cess under section 115BBH and no set-off for losses, including impermanent loss. Keep records of every deposit, harvest and withdrawal, and check with a tax professional. This calculator does not include tax.