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    DeFiCalculator.caMITEY network · Canadian DeFi maths
    Scenario 6 of 10 · illustrative

    Scenario: when gas eats a small position's yield

    Casey earns a 12% reward rate and can claim and restake rewards whenever they like, but each claim costs about $4 in gas. Casey has heard that compounding daily maximizes yield. Does it?

    Mitey the yeti sitting with a small potted plant, with an hourglass
    Mitey: Daily compounding is a habit, not a rule. Size decides.

    The assumptions

    InputValue
    Reward rate12% APR (illustrative)
    Cost per compound$4
    Horizon365 days
    Change the inputs in the calculator

    Step by step

    1. A $500 position. Never compounding ends at $560.00. Compounding daily ends at $0.00. The best schedule is not to compound at all, ending at $560.00.
    2. A $2,000 position. Never compounding ends at $2,240.00. Compounding daily ends at $704.01. The best schedule is not to compound at all, ending at $2,240.00.
    3. A $10,000 position. Never compounding ends at $11,200.00. Compounding daily ends at $9,723.80. The best schedule is about 4 times a year, ending at $11,238.35.
    4. A $50,000 position. Never compounding ends at $56,000.00. Compounding daily ends at $54,822.79. The best schedule is about 10 times a year, ending at $56,292.36.

    Gain after a year by schedule

    PositionNeverMonthlyWeeklyDaily
    $500$60$13−$157−$500
    $2,000$240$203$34−$1,296
    $10,000$1,200$1,218$1,053−$276
    $50,000$6,000$6,291$6,146$4,823
    The takeawayCompounding frequency is a cost-benefit decision. On small positions, frequent claims spend more on gas than they add in yield.

    Questions people ask

    Is an auto-compounding vault cheaper?

    It spreads gas across depositors but usually charges a performance or management fee, and adds another smart contract to the risk.

    Names, rates and prices in this scenario are illustrative and computed for education. They aren't forecasts, quotes or recommendations.

    Calculator

    Compounding vs gas

    Find the compounding frequency that wins after paying gas each time.

    Calculator

    Gas & fee breakeven

    Days to recover the cost of moving, and the minimum sensible size.

    Calculator

    APR to APY

    Convert a quoted APR into an effective yearly yield, both directions.

    Scenario

    staking for six months with a 21-day unbonding period

    500 tokens staked at a 7% gross rate with 10% commission, a 3-day warm-up and 21-day unbonding. The net rate, effective rate and price risk.

    Next scenario: an emergency fund in a stablecoin or a GIC?