Price Ratio

0.0000

Impermanent Loss

0.00%

Trading Fees

$0.00

Net Return

0.00%

Liquidity Pool Calculator Guide
The Liquidity Pool Calculator is a practical tool for analyzing and calculating investment returns in Decentralized Finance (DeFi) protocols. This tool helps investors gain a precise understanding of potential profits and existing risks before entering liquidity pools.
When you place your tokens in a Liquidity Pool, you act as a Liquidity Provider. This investment can be profitable in two ways: trading fees and farming rewards. However, the main risk of this type of investment is Impermanent Loss, which occurs due to changes in the price ratio between tokens.
In the strategy analysis section, you can compare simple token holding (HODL) with liquidity provision (LP). This comparison includes calculating the Annual Percentage Yield (APY) considering the compound effect. Additionally, the risk-to-return ratio is calculated to provide a better view of strategy effectiveness.
Practical Example: Suppose you want to invest $1,000 in a liquidity pool for 30 days. With an APR of 20% and trading fees of 0.3%, the calculator determines that:
  • If relative prices remain stable, you profit from fees and farming rewards
  • If the price of one token changes, impermanent loss starts to increase
  • The breakeven point is where fee income and rewards compensate for the impermanent loss
Important Note: All calculations in this tool are approximate and should not be the sole basis for investment decisions. Other factors such as Smart Contract Risk, Market Volatility, and sudden changes in protocol parameters should also be considered.