Back to DeFi Risk Map
Free Tool

DeFi Yield Break-Even Calculator

Find out the minimum APY a DeFi protocol must pay before its risk-adjusted return beats Treasury bills. Based on the standard expected-value formula.

1 Your Inputs

Adjust the three sliders. Numbers update in real time.

0%5%10%
0%10%20%
$100$500K$1M
0%25%50%

2 Your Required APY

The minimum yield this DeFi protocol must pay to match T-bills on a risk-adjusted basis.

Break-Even Required APY
3.78%
At a 2% annual exploit risk, you need at least 3.78% APY just to match the expected value of holding T-bills. Anything below this is a bad trade.
Expected $ Loss / Year
$200
Risk-Free Yield
$370
DeFi Yield (gross)
$400
DeFi Net of Expected Loss
$200
The Formula
Required APY ≥ T-Bill Yield ÷ (1 − p)

What Should You Actually Demand?

The break-even formula above is the minimum rational threshold. In practice, you should demand a real risk premium on top of break-even, humans aren't risk-neutral, and a 100% loss is psychologically devastating in a way that earning an extra 40 bps isn't.

Strategy Tier Reasonable APY Why
T-Bills / Money Market 3.5–4.5% Risk-free benchmark. Anything below this in DeFi makes no sense.
Blue-chip stablecoin lending
(Aave, Morpho curated vaults)		 5–8% Smart contract risk + governance risk + tail-event correlation. Need 200–500 bps over T-bills.
Aggregated yield strategies
(routing across protocols)		 8–15% Stacking risks across multiple protocols. Need to compensate for correlated tail events.
Delta-neutral / basis trades
(Ethena-style)		 12–25% Steady-looking yield but high variance. Funding flips negative and reserves drain.
High-APY farms / incentive programs 20%+ If you don't have a clear edge, you're the yield being farmed.

How This Calculator Works

The calculator uses a standard expected-value model. If p is the annual probability of total loss and r is the risk-free Treasury yield, the minimum APY a risky alternative must pay to match T-bills on an expected-value basis is:

Required APY ≥ r ÷ (1 − p)

The probability inputs map roughly to:

  • 0.5%, Top-tier protocols with multi-year track records, immutable cores, and battle-tested architecture (Aave, Uniswap)
  • 2%, Market-average estimate for mature protocols, roughly aligned with what on-chain insurance markets price exploit cover at
  • 5%, Newer protocols or those with unproven risk frameworks
  • 10%+, Experimental protocols, recent forks, anything without serious operational history

Pick the number that matches your honest assessment of the protocol you're evaluating. There is no "correct" probability, this is a judgment call informed by audit history, multisig design, contributor track record, and your own conviction in the team.

This is not financial advice. The calculator is a thinking tool. Real decisions involve dozens of factors this model can't capture: liquidity preferences, tax implications, time horizons, and your personal risk tolerance. Use it to challenge your assumptions, not to replace them.

Track every protocol's risk in one place

The DeFi Risk Map scores 14 protocols across 6 risk dimensions including admin architecture vulnerability. See how your protocols actually compare.

Open the DeFi Risk Map →