LP Profit & Yield Calculator

Understanding yield earnings

Decentralized exchanges distribute trade fees to liquidity providers. The APR represents the annual rate of these fees relative to the capital provided. Earned fees accumulate directly inside the liquidity pool and are realized when you withdraw your assets.

There is nothing to claim and no button to press. Your share of the pool is simply worth a little more after each swap, which is why the figure above is added to your deposit rather than paid out separately.

An APR is a snapshot, not a promise

This is the single biggest source of disappointment in DeFi. A quoted pool APR is almost always backward-looking: it takes recent trading volume and projects it forward for a year as though nothing changes.

Volume changes constantly. A pool showing 40% during a busy week can pay a fraction of that over the following month, and the number on the screen will have updated without ever telling you it was wrong. Treat a headline APR as a description of last week, not a rate you have been offered.

Your own share matters too. Fees are split across all liquidity in the pool, so when other people deposit, the same trading volume is divided more ways and your rate quietly falls.

What this calculator does not include

It estimates fee income only, and assumes both token prices stay put. That second assumption is the one to watch.

If the two prices move apart, your position also carries impermanent loss, which can wipe out the fees entirely. A 2x divergence costs about 5.7%, which is roughly what a 24% APR takes a full quarter to earn. Run both numbers before deciding: Impermanent Loss Calculator.

Compare them as percentages of your capital, not as dollars, since that is the only way the two figures line up. The worked example below does exactly that.

Also not included: the cost of getting in and out. Pools take both sides in equal value, so entering usually means selling half of what you hold, and you pay swap fees and slippage on that trade, then again on the way out.

How to sanity check a pool before you trust its APR

• Look at volume, not just APR. Fees come from trading. A pool with little volume pays little, whatever the banner says.
• Check the volume-to-liquidity ratio. High volume against a small pool is what actually produces yield.
• Ask where the yield comes from. Trading fees are sustainable. Token incentives are a subsidy that ends, and often ends abruptly.
• Prefer a longer window. A 30-day average tells you far more than a 24-hour spike.
• Be suspicious of very large numbers. An APR in the hundreds usually prices in a risk you have not identified yet.

A worked comparison

Take the defaults: $1,000 at 24% APR for 90 days, which earns about $59. The useful way to hold that is as a percentage of your capital: 5.9% for the quarter. Divergence is also a percentage, so the two compare directly.

• Prices hold together: you keep the full 5.9%.
• They drift 1.5x apart: divergence costs about 2.0%, so you are roughly 3.9% ahead of simply holding.
• They move 2x apart: divergence is about 5.7% against 5.9% of fees. The whole quarter was close to break-even.
• They move 3x apart: divergence is about 13.4%, well past what the fees earned, and holding the two tokens would have beaten the pool.

That is the trade in one line: fees accrue steadily with time, divergence is decided by the market. A pool with real volume and a pair that moves together is what makes the first number win.

That is the trade in one paragraph: fees accrue steadily with time, divergence is decided by the market. A pool with real volume and a pair that moves together is what makes the first number win.

Estimates only. Actual returns depend on trading volume, which varies. FiLot is an analysis tool, not financial advice. Providing liquidity carries real risk of loss.