Lending Protocol Interest Calculator
Net the interest you earn supplying crypto against the interest you pay borrowing against it, over any holding period.
How it works
Interest earned = supplied × supply APY × years · Interest paid = borrowed × borrow APR × years · Net = earned − paid
DeFi money markets let you earn a supply yield on deposited collateral while borrowing another asset against it at a higher rate. The spread between what you earn and what you pay is your carrying cost. Borrow rates almost always exceed supply rates, so a leveraged position runs at a net cost unless the borrowed funds are put to more productive use. Watch your loan-to-supply ratio too — the higher it climbs, the closer you sit to liquidation.
Worked example
Supply $10,000 at 3% APY and borrow $4,000 at 6% APR for 12 months. You earn 10,000 × 0.03 = $300 and pay 4,000 × 0.06 = $240, for a net gain of $60, with a 40% loan-to-supply ratio.
Frequently asked questions
Why is the borrow rate higher than the supply rate?
The protocol keeps a spread (the reserve factor) between what borrowers pay and what suppliers earn, and utilization pushes borrow rates up. That spread funds the protocol and cushions bad debt, so borrowing always costs more than supplying earns.
Does this account for liquidation risk?
No. This tool only nets interest. If the value of your collateral falls or your borrow grows past the protocol’s threshold, your position can be liquidated at a penalty regardless of the interest math.
Is the calculation simple or compound interest?
It uses simple interest for clarity over the chosen period. Real protocols accrue per block, so over long horizons the compounded figure will be slightly higher on both the supply and borrow sides.
Related calculators
Educational estimate for crypto/DeFi mechanics — token prices are volatile and yields are not guaranteed. Not financial or tax advice.