DeFi liquidity pool calculator with multiple tools for yield farming. Calculate liquidity pool returns, autocompounding, and impermanent loss considerations.
Amount you're providing to the liquidity pool
Annual percentage yield from trading fees
How long you'll provide liquidity
How often rewards are reinvested
Type of asset pair in the pool
Liquidity pools are smart contracts holding pairs of tokens that enable decentralized trading. Liquidity providers (LPs) deposit equal values of both tokens and earn trading fees from swaps. For example, a USDC-ETH pool allows traders to swap between these tokens.
LPs earn a percentage of trading fees (typically 0.3% per swap on Uniswap, 0.05-0.3% on Curve). High-volume pools generate more fees. APY represents annualized fee earnings as a percentage of your deposit. 20% APY means you'd earn $2,000 annually on a $10,000 deposit.
Some protocols (Yearn, Beefy Finance) auto-harvest your fees and reinvest them back into the pool. This compounds your returns without manual claiming and restaking. Daily autocompounding significantly boosts long-term yields compared to manual claiming.
Stablecoin-Stablecoin: Lowest IL risk (USDC-DAI).Stablecoin-Volatile: Moderate IL (ETH-USDC).Volatile-Correlated: Moderate-high IL (BTC-ETH).Volatile-Uncorrelated: Highest IL (exotic pairs).
IL occurs when token prices diverge after you deposit. You'd have more value holding tokens than providing liquidity. The more prices diverge, the higher IL. Stablecoin pairs have minimal IL; volatile pairs have high IL. Trading fees can offset IL in high-volume pools.
Higher APY often means higher IL risk. A stablecoin pool with 8% APY may net you more than a volatile pool with 40% APY if IL exceeds 35%. Always consider net APY (APY minus expected IL) when choosing pools.
Enter the total USD value you're providing. For a 50/50 pool with $10,000 total, you'd deposit $5,000 of Token A and $5,000 of Token B. The calculator uses the combined $10,000 value.
Find this on the DEX's liquidity page (Uniswap, Curve, Balancer). APY shows annualized trading fee earnings. Note: APYs fluctuate with trading volume. Use recent 7-30 day averages, not short-term spikes.
How long you'll provide liquidity in days. 365 = 1 year, 730 = 2 years. Longer periods amplify compound effects but increase IL exposure if prices diverge significantly.
Select Daily (365x) if using auto-compounding vaults (Yearn, Beefy). Select No Compounding if manually claiming. More frequent compounding = higher returns.
Choose based on your token pair: Stablecoin-Stablecoin (lowest IL),Stablecoin-Volatile (moderate), Volatile-Correlated (higher), or Volatile-Uncorrelated (highest IL risk).
You'll see: Expected Returns (fee earnings), Net APY (after IL), and IL Risk (estimated loss percentage). Net APY is your true expected yield.
Provide $20,000 to ETH-USDC pool at 25% APY for 1 year with daily autocompounding:
Result: ~$25,700 total (~$5,700 returns - ~$1,000 IL = ~$4,700 net profit, ~20% net APY)
Simple = Investment × (APY / 100) × Years
Example: $10,000 × (20 / 100) × 1 = $2,000
Periods = Frequency × Years
Example: 12 × 1 = 12 periods
Rate = APY ÷ Frequency ÷ 100
Example: 20 ÷ 12 ÷ 100 = 0.0167 per period
Returns = Investment × ((1 + Rate)^Periods - 1)
Example: $10,000 × ((1.0167)^12 - 1) = $2,194
IL Risk = Based on pool type volatility
Stable-Stable: 0.5% | Stable-Volatile: 5% | Volatile-Volatile: 8-15%
Net APY = Gross APY - IL Risk %
Example: 20% - 5% = 15% net APY
Expected = Frequency > 0 ? Compounded Returns : Simple Returns
If autocompounding is enabled, use compound formula. Otherwise, use simple returns. Autocompounding can add 8-15% more profit over a year compared to no compounding!
IL is the opportunity cost of providing liquidity vs. simply holding tokens. If token prices diverge from your deposit ratio, the AMM rebalances your position, resulting in less value than if you'd just held. It's impermanent because if prices return to original ratios, the loss disappears. But if you withdraw when prices have diverged, the loss becomes permanent.
You deposit 1 ETH + $2,000 USDC ($4,000 total) into a pool. ETH doubles to $4,000.
Holding: 1 ETH ($4,000) + $2,000 USDC = $6,000
Pool: 0.707 ETH ($2,828) + $2,828 USDC = $5,656
IL: $6,000 - $5,656 = $344 (~5.7% loss)
1.25x: ~0.6% IL
1.5x: ~2% IL
2x: ~5.7% IL
3x: ~13.4% IL
4x: ~20% IL
5x: ~25.5% IL
• Choose stablecoin pairs (USDC-DAI) for minimal IL
• Use correlated pairs (ETH-stETH, WBTC-renBTC)
• Ensure APY is 2-3x higher than expected IL
• Concentrated liquidity (Uniswap V3) can boost fees to offset IL
• Short-term provision in sideways markets reduces IL exposure
• High trading volume pools where fees are much greater than IL
• Long-term LPs who don't plan to withdraw soon
• Stablecoin pools with negligible price movement
• When you're bullish/bearish on both tokens equally
Trading fees can overcome IL! A 20% APY pool where you experience 8% IL still nets you 12% APY - better than simply holding in many cases. High-volume pools with tight spreads (stablecoin pools on Curve) often generate 10-15% APY with less than 1% IL, making them ideal for LPs. Always calculate Net APY = Gross APY - Expected IL.
Pools: USDC-USDT-DAI, 3pool | APY: 5-15% | IL: less than 0.5% |Risk: Very Low. Best for capital preservation with yield.
Pools: ETH-stETH, WBTC-renBTC | APY: 3-8% | IL: less than 2% |Risk: Low. Minimal IL due to high correlation.
Pools: USDC-DAI, USDC-USDT | APY: 8-20% | IL: less than 1% |Risk: Low. Concentrated liquidity boosts returns.
APY: 20-40% | IL: 5-10% | Risk: Moderate. High volume offsets IL in many cases.
APY: 15-30% | IL: 8-12% | Risk: Moderate-High. Good for correlated major pairs.
APY: 40-100%+ | IL: 15-30% | Risk: High. Only for active LPs who monitor daily.
The primary risk! Price divergence between paired tokens reduces your value vs. holding. Can easily exceed 10-25% in volatile markets, wiping out fee earnings.
Bugs or exploits in pool contracts can drain funds. Only use battle-tested protocols with multiple audits (Uniswap, Curve, Aave). New pools or protocols are significantly riskier.
Malicious actors create pools with 100%+ APYs, then drain liquidity. Verify token contracts, check locked liquidity, and avoid unknown projects promising unrealistic returns.
APYs change constantly based on trading volume and liquidity. A pool showing 40% APY today might drop to 15% next week if volume decreases or more LPs join.
If one token crashes, you're left holding more of the declining asset. Your $10,000 deposit could become $3,000 if a token drops 70%, regardless of trading fees earned.
Depositing, withdrawing, and claiming rewards cost gas. On Ethereum, fees can be $50-200+ during congestion. Ensure your position size justifies these costs (minimum $5,000-10,000).
Some yield farming protocols lock LP tokens for days/weeks. You can't exit during price crashes. Always check lock-up periods before depositing.
Each reward claim, deposit, and withdrawal may be a taxable event. IL can create capital losses. Consult a crypto tax professional - DeFi taxes are extremely complex.
Protocols like Yearn Finance and Beefy Finance auto-harvest and reinvest your fees daily. This can boost returns by 10-20% annually vs. manual claiming, and saves gas fees.
More trading = more fees. Prioritize pools with $10M+ daily volume. Check 24h volume on DEX analytics (info.uniswap.org). Major pairs (ETH-USDC) have consistent high volume.
Target pools where APY is 2-3x higher than expected IL. A 25% APY with 8% IL (17% net) beats a 50% APY with 30% IL (20% net) due to lower risk.
Enter pools when prices are stable or at expected ratios. Exit during high volatility to minimize IL. Sideways markets are ideal for LPs - you earn fees without price risk.
Uniswap V3 allows narrower price ranges, boosting fee earnings 2-10x. But increases IL risk if prices move outside your range. Best for stablecoins or tight ranges.
Track IL weekly. If realized IL exceeds 10-15%, consider exiting and moving to lower-volatility pools. Set alerts for price divergence thresholds.
Conservative LP: $20,000 in USDC-DAI on Curve, 10% APY, daily autocompounding = $22,100+ in 1 year (0.5% IL) = ~$2,000 net profit
Moderate LP: $20,000 in ETH-USDC on Uniswap V3, 25% APY, daily autocompounding = $25,700 (5% IL) = ~$4,700 net profit
Key Insight: The moderate strategy nets 2.3x more profit but carries higher risk. Diversify: 60% in conservative pools, 40% in moderate pools for balanced risk-adjusted returns!
Liquidity pool participation creates multiple taxable events: depositing (potentially), claiming rewards, withdrawing, and impermanent loss realization. Fee earnings are typically taxable as income. IL losses may be deductible but require professional guidance. Tax treatment varies significantly by jurisdiction.
DeFi liquidity pool taxation is extremely complex and evolving. The IRS and other tax authorities are still developing guidance. Impermanent loss treatment, auto-compounding events, and LP token valuation create significant uncertainty. Consult with a crypto-specialized CPA or tax attorney to ensure compliance, optimize your tax strategy, and avoid penalties. The cost of professional advice is far less than potential audit costs or incorrect filings.