DeFi Yield Farming Workbook: Evaluating Protocols, Calculating Returns, and Managing Risk

The difference between a yield farmer who is making informed decisions and one who is simply chasing the highest APY number is the ability to decompose that number, stress-test it, and compare it to the risks being taken. This workbook course builds that ability through structured evaluation templates, worked calculations, and practical checklists. By the end of this course you will be able to decompose an advertised APY into its component sources and evaluate each component's sustainability, calculate impermanent loss for a liquidity position given a specified price change, score a DeFi protocol's risk profile using a structured checklist, track a yield farming portfolio across multiple protocols using a consistent methodology, and calculate net yield after accounting for gas costs and impermanent loss. What you will learn: - APY decomposition worksheet: separating fee yield, token reward yield, and compounding frequency effects - Token reward sustainability analysis: emission schedule review, token inflation rate, and protocol revenue vs. reward cost - Impermanent loss calculation worksheet: worked examples for 25%, 50%, and 100% price divergence scenarios - Break-even analysis: calculating the fee income required to offset a given impermanent loss at different APY levels - Protocol risk scoring checklist: audit status, time in production, TVL trend, team transparency, and governance structure - Gas cost tracking: estimating transaction costs for entry, harvest, and exit and incorporating them into net yield calculation - Portfolio tracking template: recording position size, entry date, current APY, impermanent loss estimate, and net P&L - Exit decision checklist: conditions that trigger protocol exit — TVL drop, token price collapse, governance changes Each section presents a worked example followed by a blank template for your own calculations. Case studies illustrate common mistakes — chasing a new pool's high initial APY without accounting for token dilution, holding a liquidity position through a large price divergence that turns a fee profit into a net loss, staying in a protocol despite early warning signs of a liquidity crisis. Reflection prompts ask you to apply each framework before reviewing the worked version. This course is designed for DeFi participants who want to move from intuitive to analytical yield farming decisions. Suitable for learners who are new to DeFi yield strategies but have basic familiarity with cryptocurrency and wallets. This course is informational and educational and does not constitute financial or investment advice.