Yield Farming APR Calculator

Understanding the Yield Farming APR Calculator

A yield farming APR calculator converts a daily token reward stream into an annualised percentage return. The arithmetic is straightforward, and the figure it produces should be treated with more suspicion than almost any other yield number in finance, because it depends on a token price that is itself often propped up by the farming it's rewarding.

How it actually works

Enter your principal, the number of reward tokens received per day, the current token price, and the number of days. The calculator multiplies rewards by price for daily value, extends it across the period, then annualises against principal. At $10,000 principal earning 3 tokens a day at $2 each over 30 days, that's $6 daily, $180 in total rewards, and an APR of 21.90%.

The deeper context most people miss

Nothing in that table changed except the token price, and the APR moved by a factor of ten. Reward emissions are usually fixed in token terms rather than dollar terms, so the advertised yield is a function of a price that can fall faster than you can compound. This is why headline farming APRs are unreliable in a way that a bank rate or a bond coupon simply isn't.

Where farming rewards come from, and why high APRs decay

Yield farming rewards are usually token emissions: a protocol issues new units of its own token to people who supply liquidity or stake assets, as an incentive to attract capital. Understanding that these are newly created tokens rather than income generated by economic activity explains most of what happens next. Emissions are typically fixed per block or per day and shared among all participants, so as more capital arrives to chase an attractive APR, each participant's share of the same emission pool shrinks and the advertised rate falls, often dramatically, within days of launch. Simultaneously, the emissions themselves increase circulating supply, which exerts downward pressure on the token price unless demand grows at least as fast, and most farmers sell their rewards as they receive them, which supplies that selling pressure directly. The result is a characteristic pattern where a farm launches at an eye-catching triple-digit APR, capital floods in, the rate collapses toward something ordinary, and the token price declines as early participants take profits, leaving later entrants earning a mediocre rate in a depreciating asset. This isn't necessarily fraudulent, and some protocols use emissions sensibly as a bootstrapping mechanism before transitioning to fee-based rewards. But it does mean an advertised APR describes a moment rather than a durable rate, and the question worth asking is always whether the protocol generates real revenue that could sustain rewards once emissions taper.

A worked example: the APR that produced a loss

Suppose you deposit $10,000 into a farm advertising a 200% APR, paid in a token trading at $2. Over 90 days you accumulate rewards that, valued at the deposit-day price, would be roughly $4,900. That looks like an outstanding quarter. Now account for what typically happens alongside. Emissions and farmer selling push the token price down 70% over that period, so if you held the rewards rather than selling continuously, they're worth about $1,470 instead. If you also supplied a liquidity pair rather than staking a single asset, impermanent loss on a volatile pair might cost several percent of principal. And the deposit and withdrawal transactions consumed gas. The position that appeared to earn 200% annualised may have returned somewhere near break-even or worse. Run the same scenario with continuous selling of rewards into a stablecoin, and the outcome improves substantially, because you captured the dollar value as it was earned rather than holding a depreciating asset. This is the single most consequential operational decision in farming, and it's why experienced participants generally harvest and sell on a schedule rather than accumulating, accepting the gas cost and the tax events as the price of not being exposed to the reward token's decline.

Deciding whether a farm is worth entering

Before depositing, several questions do more work than the APR figure. What is the emissions schedule, and when does it taper? A published declining schedule tells you the rate you see today is temporary and by how much. What proportion of the yield is emissions versus actual protocol revenue such as trading fees or borrowing interest? Fee-derived yield persists as long as the activity does; emissions-derived yield ends when the tokens run out. What is the token's fully diluted valuation relative to its current market capitalisation? A large gap means substantial supply is still to be released, which is future selling pressure you're being paid in. Is there a lock-up or vesting period on rewards, which prevents you from selling into strength and exposes you to the price at unlock rather than at earning? What are the deposit and withdrawal gas costs relative to your position size, since a $500 position facing $60 in round-trip transaction costs needs a 12% return simply to break even? And the standard protocol questions apply with full force: audit status, operating history, total value locked, and whether the contracts are upgradeable by an admin key. A farm offering an unusually high rate is compensating for something, and identifying what is the entire task.

APR against APY, and the compounding assumption

This calculator reports APR, a simple annualisation with no compounding, which for once is the conservative choice and worth understanding. Many farming interfaces advertise APY instead, assuming rewards are harvested and redeposited at some frequency, and the difference at high rates is enormous: a 100% APR compounded daily produces an APY near 171%, while compounded hourly it approaches 172%. Those APY figures are technically correct given the assumption and practically misleading, because achieving them requires harvesting and recompounding at that frequency, and every harvest costs gas. On a network with meaningful transaction costs, daily compounding of a modest position can consume more in fees than the compounding gains, so the realistic achievable yield sits well below the advertised APY and sometimes below the simple APR. There's an optimal compounding frequency that balances the marginal gain from recompounding against the gas cost of doing it, and for smaller positions that frequency can be as infrequent as monthly or not at all. Auto-compounding vaults exist to solve this by pooling participants and batching the harvests, which spreads the gas cost, though they charge a performance fee and add another layer of smart contract risk on top of the underlying protocol. When comparing two farms, confirming whether the quoted figures are APR or APY, and under what compounding assumption, is necessary before the comparison means anything.

Variations: single-asset staking, LP farming, and auto-compounding vaults

Single-asset staking, where you deposit one token and earn rewards, avoids impermanent loss entirely, so the reward calculation this tool performs is close to the complete picture aside from the reward token's price behaviour. Liquidity provider farming, where you deposit a pair and stake the LP position, adds trading fee income on top of emissions but introduces impermanent loss, which for volatile pairs can exceed the farming yield entirely, so the APR here would need adjusting downward by the divergence loss to be meaningful. Auto-compounding vaults harvest and reinvest on your behalf, capturing the APY rather than the APR while charging a performance fee, typically a percentage of yield, and adding the vault's own contract risk. Some protocols offer boosted rewards for locking their governance token for extended periods, which raises the rate at the cost of illiquidity in an asset whose price you can no longer exit. Each variation changes which risks dominate, so the right comparison is never between headline rates alone but between rates adjusted for the specific risk each structure carries.

Reading a farming APR sceptically

Establish what proportion of the yield comes from actual protocol revenue rather than token emissions, since fee-derived yield persists while emissions end on a schedule. Check the emissions schedule and the gap between fully diluted valuation and current market capitalisation, both of which indicate future supply and therefore future selling pressure. Assume the advertised rate will fall as capital arrives, because emissions are shared and each new participant dilutes the rest. Decide your harvest policy before depositing, since selling rewards continuously captures dollar value while accumulating exposes you to the reward token's decline, which is usually the difference between a profitable position and a loss. Weigh gas costs against position size, since round-trip transaction costs can require a double-digit return on small positions. And confirm whether quoted figures are APR or APY and at what compounding frequency, because the achievable rate after gas is often well below an advertised APY.

What people get wrong

• Treating the APR as durable, when it's calculated from a token price that emissions themselves tend to push downward and from an emission share that shrinks as capital arrives.
• Accumulating reward tokens rather than harvesting and selling, which exposes the entire yield to the decline of the asset you're being paid in.
• Comparing an advertised APY against another farm's APR, when the APY assumes frequent recompounding that gas costs may make unachievable.
• Entering a farm without checking what proportion of yield is protocol revenue versus emissions, which determines whether the rate has any durability at all.

Where the math comes from

Daily Rewards Value = Daily Reward Tokens × Token Price. Total Rewards = Daily Rewards Value × Days. APR = (Total Rewards / Principal) × (365 / Days) × 100. This is a simple annualisation with no compounding, so it will be lower than an advertised APY assuming frequent recompounding. It values rewards at the current token price and excludes impermanent loss, gas costs, and any change in the reward token's price over the period.

Questions and answers

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