Why doesn’t advertised APY equal what I actually earn?

Because four real-world drags eat into the headline. Platform / protocol fees (often 10-20% of yield). Impermanent loss for LP positions (3-30% depending on volatility). Gas + bridging round-trip costs (flat dollar — devastating on small positions). And tax (most DeFi yield is taxed as ordinary income at FMV on receipt per IRS Notice 2014-21 and Rev. Rul. 2023-14). The four together commonly destroy 50-80% of advertised APY on retail-sized positions. The calc surfaces each layer explicitly so you can see where the gap goes.

What is impermanent loss exactly?

IL is the value loss an LP suffers when the two pooled assets diverge in price compared to just holding both assets in their original ratios. The math: if asset A and B were 50/50 at deposit and A doubles while B stays flat, the pool rebalances by selling A and buying B as arb traders trade against the pool — leaving you with less A and more B than you started, locked at lower realized value than just holding 50% A and 50% B. The mathematical floor is well-known: 2× divergence ≈ 5.7% IL, 4× divergence ≈ 20% IL, 10× divergence ≈ 49.4% IL. Actual realized IL depends on path-dependence and fees earned, but the upper bound is fixed.

How do I estimate IL risk % for my pair?

Anchor to the volatility band selector first (stable, mid, high). Then estimate your expected price divergence over the horizon. For ETH-USDC at mid-volatility, 30% expected ETH move over 6 mo translates to ~2.7% IL. For altcoin pairs at high-volatility, 100% expected divergence over 12 mo translates to ~5.7% IL × 2.5× band = ~14% effective drag. Defillama and IL.fi have historical IL backtesters by pool — pull your specific pool’s realized IL over the last 30/90/365 days and use that as the base estimate.

Why does the calc subtract gas as a flat dollar instead of a percentage?

Because gas IS flat — a $50 round-trip on Ethereum mainnet costs $50 whether your position is $500 or $50,000. Position-size-independent costs hit small positions disproportionately: a $50 gas round-trip on a $500 position is 10% drag; the same $50 on $50K is 0.1%. This is why retail DeFi-curious users get crushed by gas while whales operate at near-zero gas drag. The calc shows the absolute dollar to make this visible — you can see exactly when your position is too small for the chain you’re using.

Why is tax applied to gross-after-fee yield instead of net-after-IL yield?

Because IRS rules separate yield income from capital position changes. Yield (staking rewards, LP fees, protocol distributions) is taxed as ordinary income at FMV on receipt — that’s the gross yield amount per Notice 2014-21 and Rev. Rul. 2023-14. Impermanent loss, by contrast, is an unrealized capital loss on the underlying LP position — it’s separately tracked and only realized when you withdraw and sell. So the tax calculation correctly applies to yield-after-fee (the income event), and IL appears as a parallel capital-account drag that doesn’t reduce reportable income. This is a real tax planning trap for LPs in high-IL pools — you can owe ordinary-income tax on yield while simultaneously accumulating capital losses you can’t deduct against that tax.

Why use the T-bill rate as the benchmark?

Because it’s the cleanest available risk-free rate for retail US investors, available on government direct (TreasuryDirect) or via brokerage with zero counterparty risk and zero work. The 4-week T-bill yields 4-5% in 2024-25; the 13-week and 1-yr bills track close. The honest comparison for any crypto yield is: real APY (post-fees, post-IL, post-tax) − T-bill APY = the risk premium. If the spread is small or negative, you’re not being paid to take protocol exploit + bridge hack + smart-contract bug + token volatility risk. Many advertised crypto yields turn out to be uncompensated risk after this comparison.

What about token incentives (CRV, BAL, governance tokens) on top of base yield?

Treat them as part of the advertised APY input — most protocol dashboards already include them. The trap is dual: (1) token rewards are taxed as ordinary income at FMV on receipt (same as base yield), AND (2) they’re subject to subsequent capital-gains treatment when you sell, which can be a large additional tax drag if the token appreciated since receipt. The calc handles (1) correctly via the tax rate input. For (2), apply the lot optimizer separately on the token positions when you eventually sell. The further trap: many token rewards trade at 30-70% below their dashboard FMV due to unlocks / dump pressure — your real yield is the actual liquidation price, not the receipt FMV.

Should I include compounding in the gross yield?

Calc uses simple yield (APY × time, no compounding). For most retail positions and short horizons (under 12 months), the compounding lift is small (~3-5% on top of the headline APY at 10% APY). For long-horizon positions where you auto-compound daily, the lift is bigger — at 18% APY auto-compounded for 12 months you earn ~19.7% effective vs 18% simple. The calc deliberately under-states this lift because (a) most users don’t actually auto-compound (gas + tax-on-each-claim makes manual compounding unprofitable below ~$10K positions), (b) compounding doesn’t change the IL / tax / gas drags which are the dominant story, and (c) it’s the conservative default. Add 2-5 pp manually if you genuinely auto-compound at scale.

How do I model multi-token rewards or split-yield protocols?

Sum the components into a single advertised APY input. If a protocol offers 5% base ETH staking yield + 4% in CRV emissions + 2% in re-staking points, enter advertised APY = 11%. Apply the platform-fee % to the bundle. The calc’s simplification glosses over the differential tax treatment of points (sometimes treated as nothing until token-redemption) vs. liquid rewards (taxed on receipt) — for points-heavy programs, set advertised APY to just the liquid portion and treat points as upside. For a more careful model, run the calc twice — once on liquid-only yield, once on liquid + points — and compare the spread.

What about smart-contract risk and exploit risk in the calc?

Not directly modeled — they’re binary tail risks rather than continuous drags. The implicit framing: the T-bill spread (real APY − 4.5%) is the premium you’re paid to take ALL crypto-specific risks combined: smart-contract bugs, oracle exploits, bridge hacks, governance attacks, depeg events, regulatory shock. As of 2024, DeFi protocols still average ~$1-3B in annual exploit losses — non-trivial event-tail risk for any single position. If your real APY is only 2-3 pp above T-bill, you’re likely under-compensated; 5-8 pp is the calibration zone where a thoughtful operator might accept the risk; 12+ pp is the ‘clean wins’ zone where the premium covers a reasonable expected value of tail loss.

How does this compare to running my own spreadsheet?

The math is the same as a careful spreadsheet — gross yield − fee − IL × volatility band − gas − tax = real net. What this calc adds: the volatility band selector (most spreadsheets ignore that IL scales 25× from stable to high-volatility pairs), the T-bill comparison (forces an honest opportunity-cost framing), the conditional verdict ranking by real APY tier, and the tax treatment matched to IRS guidance (yield is ordinary income, IL is unrealized capital loss — most spreadsheets get this wrong). If you’re already spreadsheet-fluent on yield math, the calc is the framing layer on top. If you’re not, it’s the fastest honest underwriting tool for any DeFi position before you commit capital.

When should I just keep my money in T-bills instead of chasing yield?

Five clean cases. Real APY less than T-bill (calc shows negative spread). Real APY 0-2 pp above T-bill — you’re paid almost nothing extra to take crypto-level risk. Position too small for the chain (gas drag exceeds yield). Horizon too short to amortize gas. You don’t understand the protocol’s yield source (if you can’t explain WHO is paying the yield in one sentence, the answer is usually ‘new entrants buying the token, eventually you’). Repeat DeFi participants walk from 70-90% of yield opportunities they evaluate for exactly these reasons; the discipline is the moat, not access.

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Crypto Real Yield Calculator — APY After Fees, IL, Gas, and Tax

Drop the advertised APY, position size, time horizon, platform fee, gas + bridging cost, impermanent-loss risk, volatility band, and tax rate. Calculator subtracts the four real-world yield killers most DeFi tools ignore — protocol fee, IL scaled by pair volatility, gas round-trip, and ordinary-income tax — to surface real APY post-everything plus a T-bill risk-free benchmark for honest risk-adjusted comparison. Anchored to Uniswap v3 IL research, Pintail / Bancor IL formulas, Defillama fee data, and IRS Notice 2014-21 / Rev. Rul. 2023-14.

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Reviewed by CalcBold EditorialLast verified May 4, 2026Methodology

Position size

Dollar value of the position you’re putting at risk. For LP positions, the total deposited (both sides combined). Larger positions amortize gas better; small positions ($500-) are often gas-negative on L1 Ethereum.

Advertised APY

Headline APY shown on the protocol dashboard. Read whether it’s pre-fee or post-fee — pre-fee is more common (Lido shows pre-fee, Convex shows pre-fee). Treat advertised APYs above 30-50% on stable pairs with extreme skepticism; sustained yields that high usually require token emissions that decay fast.

Time horizon

How long you plan to hold the position. Short horizons (1-3 mo) get hammered by gas amortization; long horizons (12+ mo) reduce gas drag but expose you to longer IL accumulation and protocol risk.

Platform / protocol fee

% of yield kept by the protocol. Lido = 10%, Rocket Pool = 14%, Convex = variable, vault aggregators (Yearn / Beefy) often 10-20% performance fee. Read the docs — set to 0% if the advertised APY is already net-of-fee.

Gas + bridging round-trip

Total flat dollar cost: bridge in (if cross-chain) + deposit + harvest / claim + withdraw + bridge out. L1 Ethereum round-trip $50-300 in 2024-25; L2 Arbitrum / Base $5-20; cross-chain bridge $20-100 each way. Use the high end of your expected range.

Impermanent loss risk

Expected IL as % of position over the horizon. Set to 0% for non-LP positions (staking, lending, single-asset vaults). Typical LP ranges: stable-stable 0.1-1%; ETH-USDC mid-volatility 3-8%; ETH-altcoin or memecoin pairs 10-30%. Volatility band below scales this further.

Pair volatility band

Multiplier applied to your IL risk %. Stable pairs (USDC-USDT, DAI-USDC) carry minimal IL even in extreme moves; mid-volatility (ETH-USDC, BTC-USDT) is the calibration sweet spot; high-volatility (alt pairs, memecoins) can deliver 30%+ IL on large price divergence.

Tax rate (ordinary income)

Marginal ordinary-income rate (federal + state). Most DeFi yield is taxed as ordinary income at FMV on receipt — IRS Notice 2014-21, Rev. Rul. 2019-24, Rev. Rul. 2023-14 (staking). 22-37% federal alone for working professionals; add 0-13% state. NY / CA high earners often clear 45% combined.

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What This Calculator Does

The Crypto Real Yield Calculator answers the question every retail DeFi participant should ask before committing capital: what does the advertised APY actually translate to once fees, impermanent loss, gas, and tax are honestly subtracted? Drop your position size, advertised APY, time horizon, platform fee, gas + bridging cost, impermanent-loss risk, volatility band, and tax rate. The calculator returns real APY post- everything plus a T-bill risk-free benchmark for honest risk-adjusted comparison.

Most DeFi yield calculators online treat advertised APY as gospel and surface a slick ‘projected earnings’ chart. That misses four things that actually destroy 50-80% of the headline yield on retail-sized positions: protocol fees (Lido 10%, Rocket Pool 14%, vaults 10-20%), impermanent loss on LP positions (3-30% depending on pair volatility), gas + bridging round-trip ($50-300 on L1, $5-20 on L2), and tax (most DeFi yield is taxed as ordinary income at FMV on receipt — IRS Notice 2014-21, Rev. Rul. 2019-24, Rev. Rul. 2023-14). This calc surfaces each layer explicitly so you see exactly where the gap goes — and compares the result to the T-bill risk-free rate so you can answer the only question that matters: am I being paid enough to take crypto-level risk?

The Math — Four Drags Plus T-Bill Comparison

Three layers compound. Gross yield is the headline APY × time. Cost stack subtracts the four drags: protocol fee (% of yield), impermanent loss (% of position × volatility- band multiplier), gas + bridging (flat dollar), and tax (ordinary income rate on yield-after-fee — IL doesn’t reduce reportable income because IL is an unrealized capital loss on the underlying position, separately tracked). Real APY is the post-everything return annualized; the T-bill spread is the honest risk premium you’re being paid for taking smart-contract / oracle / bridge / depeg risk.

Two metrics drive the verdict. Real APY tiertells you the absolute return: under 0% destroys value before counting any protocol risk; 0-2 pp above T-bill is uncompensated; 5-8 pp is the calibration zone where thoughtful operators accept the risk; 12+ pp is the ‘clean wins’ zone. T-bill spread tells you the risk-adjusted answer: a 14% real APY sounds great until you compare it to a 4.5% risk- free T-bill — the 9.5 pp spread is the actual premium you’re paid. Most advertised yields evaporate to a 0-3 pp T-bill spread after honest accounting, which is rarely enough to compensate for crypto-specific tail risks (smart-contract bugs, oracle exploits, bridge hacks averaging $1- 3B in annual DeFi losses).

A Worked Example — “ETH-USDC LP at 18% advertised”

Suppose you want to put $10,000 into an ETH-USDC liquidity pool advertising 18% APY for a 12-month horizon. The protocol takes a 10% fee on yield. You estimate 5% IL risk over the period in mid-volatility band (1.0× multiplier). Round-trip gas is $60. Your marginal tax rate is 32%:

Gross yield: $10,000 × 18% × 1.0 yrs = $1,800
Platform fee (10% of $1,800): −$180
After fee: $1,620
IL: $10,000 × 5% × 1.0× = −$500
Gas + bridging: −$60
Pre-tax net: $1,620 − $500 − $60 = $1,060
Tax (32% on $1,620 yield-after-fee): −$518
After-tax real net: $1,060 − $518 = $542
Real APY: $542 ÷ $10,000 = 5.42%
T-bill benchmark: $10,000 × 4.5% × (1 − 32%) = $306 after-tax
Vs T-bill spread: $542 − $306 = +$236 (2.36 pp annualized)

The verdict reads: “Real yield 5.4% — barely beats T-bills (4.5%) by $236 over 12 mo. Materially higher risk for a thin premium.” The advertised 18% APY translated to 5.4% real APY after honest accounting — a 70% drag from the headline number. The 2.4 pp spread over T-bills is roughly the calibration floor for accepting crypto-level risk; many seasoned LPs require 6-8 pp before deploying capital. The clean signal: this position is borderline, would not survive a single protocol exploit or major depeg event, and the same $10K in T-bills earns $306 after-tax with zero protocol / smart-contract / bridge / depeg exposure.

When This Is Useful

Six high-value moments. Pre-deposit underwriting. Run the calc before committing capital to any DeFi position. The 70-90% rejection rate among seasoned DeFi participants comes from running this math first, not after the deposit when capital is committed and exit gas is already amortized. L1-vs-L2 selection. Run twice — once with $60 gas (mainnet), once with $10 gas (Arbitrum / Base / Optimism). Real APY shifts meaningfully on small positions; below ~$5K the L2 often wins even if its yield is lower. Position sizing. Run with multiple position-size inputs to see when gas amortization kicks in. A $500 position with $60 gas burns 12% on entry/exit alone; $50K position absorbs the same gas at 0.12%. Many yields are infeasible at retail size. Pair-volatility comparison. Run with stable / mid / high band selectors to see how much IL changes the answer. Stable-stable yields of 6% real often beat advertised 18% on alt pairs because the IL drag dominates. Tax-jurisdiction sensitivity. US ordinary-income rate (32-45% combined) is the worst-case for DeFi yield. Run with lower rates (Germany 0% on crypto held over 1 year; Singapore 0% capital gains on individual crypto) to see how much of the gap is structural vs. tax. Some yields only pencil for tax-favored jurisdictions. Real APY vs T-bill spread tracking. Re-run quarterly — when T-bill rates rise (4.5% in 2024-25 vs 0.5% in 2020-21), advertised yields need to rise materially to maintain the same risk premium. Many advertised ‘double-digit’ yields that were attractive at 0% T-bill have a zero or negative spread today.

Common Mistakes

Treating advertised APY as net yield. The headline number on most protocol dashboards is gross yield before any drag. Read whether it’s pre- or post-fee (Lido shows pre-fee, Convex shows pre-fee, vault aggregators usually show pre-fee with their performance fee disclosed separately). Set the platform-fee input correctly; doubling-counting is a common mistake.
Setting IL risk to 0% for LP positions. Even stable-stable pairs (USDC-USDT) carry small IL during depeg events; mid-volatility (ETH- USDC) routinely runs 3-8% over a 12-month hold; high-volatility (ETH-altcoin, memecoin pairs) can hit 30%+ on large divergences. Use Defillama or IL.fi to pull historical IL for your specific pool, NOT the protocol’s marketing materials.
Ignoring gas amortization on small positions. A $500 position with $60 gas round-trip burns 12% on entry-exit alone. Many advertised yields are infeasible below $5K-$10K position sizes on mainnet; L2s push the threshold down to $500-$1K. Calc surfaces gas as a flat dollar (not %) so you can see when your position is too small for the chain.
Forgetting that DeFi yield is taxed as ordinary income. Most retail users assume crypto yield gets long- term capital-gains treatment (15-20%). It doesn’t. Per IRS Notice 2014-21, Rev. Rul. 2019-24, and Rev. Rul. 2023-14, staking / LP / lending yield is taxed as ordinary income at FMV on receipt — your full marginal rate. That’s 22-37% federal alone, plus state. The tax drag is often the largest single line item, especially in high-tax states.
Trying to use IL as a tax deduction against yield income. You can’t. IL is an unrealized capital loss on the underlying LP position; yield is ordinary income. They live on different IRS schedules and don’t offset directly. The only way IL becomes deductible is when you withdraw the LP position and realize the loss — and even then it offsets capital gains and up to $3K of ordinary income per year (then carries forward). This is the LP’s tax trap: pay ordinary-income tax on yield while accumulating capital losses you can’t use.
Not comparing real APY to T-bill yield. T-bills yield 4-5% in 2024-25 with zero risk and zero work — that’s the honest benchmark for any crypto position. A 7% real APY sounds fine until you compare to 4.5% T-bill: 2.5 pp premium for taking ALL crypto-specific risks combined (smart-contract, oracle, bridge, regulatory, depeg). Many advertised yields that looked great at 0% T-bill rates in 2020-21 are uncompensated risk today.
Treating token-reward yield as base yield without dump-risk discount. Many advertised APYs include token emissions (CRV, BAL, governance tokens) that trade 30-70% below dashboard FMV due to unlock schedules and dump pressure. The IRS taxes you on FMV at receipt; the market pays you the discounted price at sale. Net: tax-on-FMV, sell-at-discount is a real drag. Discount the token-emission portion of advertised APY by 30-50% before inputting it.

Related Calculators

When you eventually sell yield-token rewards (CRV, BAL, governance tokens), pair with the Crypto Tax Lot Optimizer to elect HIFO and minimize tax on the secondary capital-gains event. Yield rewards have basis = FMV at receipt; selling them under HIFO can save 30-70% vs FIFO when basis dispersion is wide across multiple receipt events. If your IL turns into realized capital loss when you withdraw the LP position, run the Tax-Loss Harvesting Calculator on the position to see how much that loss is worth in tax savings — IL becomes deductible against gains and up to $3K of ordinary income per year (carry-forward indefinite). Pair with the Investment ROI Calculator to compare your real APY (post-everything) against benchmark equities — most retail crypto yields underperform a 7-9% S&P 500 index after honest accounting; the spread tells you whether the protocol risk premium is real. And the most useful framing layer: run the Compound Interest Calculator with your position size + T-bill rate + horizon to see the ‘default risk-free’ final balance. The honest comparison isn’t real APY % — it’s real APY $ vs T-bill $ over the actual hold period, which exposes how much the crypto premium really earns you in absolute dollars.

Frequently Asked Questions

The most common questions we get about this calculator — each answer is kept under 60 words so you can scan.

Why doesn’t advertised APY equal what I actually earn?
Because four real-world drags eat into the headline. Platform / protocol fees (often 10-20% of yield). Impermanent loss for LP positions (3-30% depending on volatility). Gas + bridging round-trip costs (flat dollar — devastating on small positions). And tax (most DeFi yield is taxed as ordinary income at FMV on receipt per IRS Notice 2014-21 and Rev. Rul. 2023-14). The four together commonly destroy 50-80% of advertised APY on retail-sized positions. The calc surfaces each layer explicitly so you can see where the gap goes.
What is impermanent loss exactly?
IL is the value loss an LP suffers when the two pooled assets diverge in price compared to just holding both assets in their original ratios. The math: if asset A and B were 50/50 at deposit and A doubles while B stays flat, the pool rebalances by selling A and buying B as arb traders trade against the pool — leaving you with less A and more B than you started, locked at lower realized value than just holding 50% A and 50% B. The mathematical floor is well-known: 2× divergence ≈ 5.7% IL, 4× divergence ≈ 20% IL, 10× divergence ≈ 49.4% IL. Actual realized IL depends on path-dependence and fees earned, but the upper bound is fixed.
How do I estimate IL risk % for my pair?
Anchor to the volatility band selector first (stable, mid, high). Then estimate your expected price divergence over the horizon. For ETH-USDC at mid-volatility, 30% expected ETH move over 6 mo translates to ~2.7% IL. For altcoin pairs at high-volatility, 100% expected divergence over 12 mo translates to ~5.7% IL × 2.5× band = ~14% effective drag. Defillama and IL.fi have historical IL backtesters by pool — pull your specific pool’s realized IL over the last 30/90/365 days and use that as the base estimate.
Why does the calc subtract gas as a flat dollar instead of a percentage?
Because gas IS flat — a $50 round-trip on Ethereum mainnet costs $50 whether your position is $500 or $50,000. Position-size-independent costs hit small positions disproportionately: a $50 gas round-trip on a $500 position is 10% drag; the same $50 on $50K is 0.1%. This is why retail DeFi-curious users get crushed by gas while whales operate at near-zero gas drag. The calc shows the absolute dollar to make this visible — you can see exactly when your position is too small for the chain you’re using.
Why is tax applied to gross-after-fee yield instead of net-after-IL yield?
Because IRS rules separate yield income from capital position changes. Yield (staking rewards, LP fees, protocol distributions) is taxed as ordinary income at FMV on receipt — that’s the gross yield amount per Notice 2014-21 and Rev. Rul. 2023-14. Impermanent loss, by contrast, is an unrealized capital loss on the underlying LP position — it’s separately tracked and only realized when you withdraw and sell. So the tax calculation correctly applies to yield-after-fee (the income event), and IL appears as a parallel capital-account drag that doesn’t reduce reportable income. This is a real tax planning trap for LPs in high-IL pools — you can owe ordinary-income tax on yield while simultaneously accumulating capital losses you can’t deduct against that tax.
Why use the T-bill rate as the benchmark?
Because it’s the cleanest available risk-free rate for retail US investors, available on government direct (TreasuryDirect) or via brokerage with zero counterparty risk and zero work. The 4-week T-bill yields 4-5% in 2024-25; the 13-week and 1-yr bills track close. The honest comparison for any crypto yield is: real APY (post-fees, post-IL, post-tax) − T-bill APY = the risk premium. If the spread is small or negative, you’re not being paid to take protocol exploit + bridge hack + smart-contract bug + token volatility risk. Many advertised crypto yields turn out to be uncompensated risk after this comparison.
What about token incentives (CRV, BAL, governance tokens) on top of base yield?
Treat them as part of the advertised APY input — most protocol dashboards already include them. The trap is dual: (1) token rewards are taxed as ordinary income at FMV on receipt (same as base yield), AND (2) they’re subject to subsequent capital-gains treatment when you sell, which can be a large additional tax drag if the token appreciated since receipt. The calc handles (1) correctly via the tax rate input. For (2), apply the lot optimizer separately on the token positions when you eventually sell. The further trap: many token rewards trade at 30-70% below their dashboard FMV due to unlocks / dump pressure — your real yield is the actual liquidation price, not the receipt FMV.
Should I include compounding in the gross yield?
Calc uses simple yield (APY × time, no compounding). For most retail positions and short horizons (under 12 months), the compounding lift is small (~3-5% on top of the headline APY at 10% APY). For long-horizon positions where you auto-compound daily, the lift is bigger — at 18% APY auto-compounded for 12 months you earn ~19.7% effective vs 18% simple. The calc deliberately under-states this lift because (a) most users don’t actually auto-compound (gas + tax-on-each-claim makes manual compounding unprofitable below ~$10K positions), (b) compounding doesn’t change the IL / tax / gas drags which are the dominant story, and (c) it’s the conservative default. Add 2-5 pp manually if you genuinely auto-compound at scale.
How do I model multi-token rewards or split-yield protocols?
Sum the components into a single advertised APY input. If a protocol offers 5% base ETH staking yield + 4% in CRV emissions + 2% in re-staking points, enter advertised APY = 11%. Apply the platform-fee % to the bundle. The calc’s simplification glosses over the differential tax treatment of points (sometimes treated as nothing until token-redemption) vs. liquid rewards (taxed on receipt) — for points-heavy programs, set advertised APY to just the liquid portion and treat points as upside. For a more careful model, run the calc twice — once on liquid-only yield, once on liquid + points — and compare the spread.
What about smart-contract risk and exploit risk in the calc?
Not directly modeled — they’re binary tail risks rather than continuous drags. The implicit framing: the T-bill spread (real APY − 4.5%) is the premium you’re paid to take ALL crypto-specific risks combined: smart-contract bugs, oracle exploits, bridge hacks, governance attacks, depeg events, regulatory shock. As of 2024, DeFi protocols still average ~$1-3B in annual exploit losses — non-trivial event-tail risk for any single position. If your real APY is only 2-3 pp above T-bill, you’re likely under-compensated; 5-8 pp is the calibration zone where a thoughtful operator might accept the risk; 12+ pp is the ‘clean wins’ zone where the premium covers a reasonable expected value of tail loss.
How does this compare to running my own spreadsheet?
The math is the same as a careful spreadsheet — gross yield − fee − IL × volatility band − gas − tax = real net. What this calc adds: the volatility band selector (most spreadsheets ignore that IL scales 25× from stable to high-volatility pairs), the T-bill comparison (forces an honest opportunity-cost framing), the conditional verdict ranking by real APY tier, and the tax treatment matched to IRS guidance (yield is ordinary income, IL is unrealized capital loss — most spreadsheets get this wrong). If you’re already spreadsheet-fluent on yield math, the calc is the framing layer on top. If you’re not, it’s the fastest honest underwriting tool for any DeFi position before you commit capital.
When should I just keep my money in T-bills instead of chasing yield?
Five clean cases. Real APY less than T-bill (calc shows negative spread). Real APY 0-2 pp above T-bill — you’re paid almost nothing extra to take crypto-level risk. Position too small for the chain (gas drag exceeds yield). Horizon too short to amortize gas. You don’t understand the protocol’s yield source (if you can’t explain WHO is paying the yield in one sentence, the answer is usually ‘new entrants buying the token, eventually you’). Repeat DeFi participants walk from 70-90% of yield opportunities they evaluate for exactly these reasons; the discipline is the moat, not access.