Detailed Instructions

Begin by collecting the raw transaction data and the prevailing network conditions. You need the exact amount of cryptocurrency you sent or received, the transaction's gas limit, the gas price paid, and the current market price of the asset. For Ethereum, you can find this data on a block explorer like Etherscan by pasting your transaction hash. The gas fee is calculated as Gas Used * Gas Price. For example, if your transaction used 50,000 gas units and you paid a gas price of 30 Gwei, the fee in Ether is 50,000 * 30 Gwei = 0.0015 ETH. Convert this to your local currency using the ETH/USD price at the time of the transaction.

• Sub-step 1: Locate your transaction hash from your wallet's history.
• Sub-step 2: Enter the hash on a block explorer to find the Gas Used and Gas Price.
• Sub-step 3: Record the exact amount of the primary asset transferred (e.g., 1.5 ETH).
• Sub-step 4: Note the asset's market price (e.g., ETH = $3,000) at the time the transaction was confirmed.

Tip: Gas prices fluctuate. Use the eth_gasPrice RPC call or a gas tracker to understand the fee you actually paid versus the estimated fee.

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// Example calculation for fee in ETH
const gasUsed = 50000;
const gasPriceGwei = 30;
const feeInGwei = gasUsed * gasPriceGwei; // 1,500,000 Gwei
const feeInEth = feeInGwei / 1e9; // 0.0015 ETH

Detailed Instructions

This step combines the value of the cryptocurrency you sent with the value of the gas fee to establish your total cost basis. This is the complete amount of capital you deployed for the transaction. First, convert the principal transaction amount to fiat. If you sent 1.5 ETH when ETH was $3,000, the principal value is 1.5 * 3000 = $4,500. Next, convert the gas fee from Step 1. If the fee was 0.0015 ETH, its fiat value is 0.0015 * 3000 = $4.50. Your total cost is the sum: $4,500 + $4.50 = $4,504.50. This figure is crucial for calculating net gain or loss.

• Sub-step 1: Calculate fiat value of principal: (Asset Amount) * (Market Price).
• Sub-step 2: Calculate fiat value of gas fee: (Fee in Crypto) * (Market Price).
• Sub-step 3: Sum the two fiat values to get the total cost basis.
• Sub-step 4: For complex transactions (e.g., swaps), ensure you are using the correct market price for the sent asset only.

Tip: Always use the market price at the block confirmation time for accuracy, not the current price. Historical price APIs can provide this data.

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// Example total cost calculation in USD
const principalEth = 1.5;
const ethPriceUsd = 3000;
const feeEth = 0.0015;
const principalValueUsd = principalEth * ethPriceUsd; // $4500
const feeValueUsd = feeEth * ethPriceUsd; // $4.50
const totalCostBasisUsd = principalValueUsd + feeValueUsd; // $4504.50

Detailed Instructions

Now, calculate the net proceeds—the value of the assets you actually received in your wallet. For a simple transfer, this is just the amount received. For a DeFi swap or trade, it's the amount of the new token you obtained. Convert this final amount to fiat using the market price of the received asset at the time of transaction completion. For instance, if you swapped 1.5 ETH for 4,500 USDC, and USDC is pegged to $1, your net proceeds are 4,500 * 1 = $4,500. It's vital to use the correct asset price; for volatile tokens, use a reliable price oracle's historical data. This value represents the gross output before considering costs.

• Sub-step 1: Identify the exact amount and type of cryptocurrency received in your wallet post-transaction.
• Sub-step 2: Find the historical market price per unit of that received asset.
• Sub-step 3: Calculate: (Amount Received) * (Price per Unit) = Net Proceeds in fiat.
• Sub-step 4: For yield farming, include any immediate reward tokens received as part of the proceeds.

Tip: If the transaction failed but you still paid gas (a 'failed transaction fee'), your net proceeds are $0, making the effective yield calculation starkly different.

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// Example for a swap to a stablecoin
const usdcReceived = 4500;
const usdcPriceUsd = 1.0;
const netProceedsUsd = usdcReceived * usdcPriceUsd; // $4500

Detailed Instructions

The final step is to compute the Effective Yield, which reveals your true return after gas fees. The formula is: [(Net Proceeds - Total Cost Basis) / Total Cost Basis] * 100. Using our examples: Net Proceeds = $4,500, Total Cost Basis = $4,504.50. The calculation is [(4500 - 4504.50) / 4504.50] * 100 = (-4.50 / 4504.50) * 100 ≈ -0.10%. This negative yield indicates a small loss due entirely to the gas fee. A positive number means a net gain. This metric is essential for evaluating whether a transaction, especially a small or frequent one, is economically viable. High gas fees can turn a nominally profitable trade into a net loss.

• Sub-step 1: Subtract Total Cost Basis from Net Proceeds to find Net Profit/Loss.
• Sub-step 2: Divide the Net Profit/Loss by the Total Cost Basis.
• Sub-step 3: Multiply by 100 to get a percentage (the Effective Yield).
• Sub-step 4: Analyze: Is the yield positive? Does it meet your target return threshold?

Tip: For recurring actions like weekly DCA (Dollar-Cost Averaging), calculate the effective yield over a period to see the cumulative impact of fees. Consider using Layer 2 solutions or scheduling transactions during low-gas periods to improve yield.

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// Final Effective Yield Calculation
const netProfitLossUsd = netProceedsUsd - totalCostBasisUsd; // -$4.50
const effectiveYield = (netProfitLossUsd / totalCostBasisUsd) * 100; // -0.10%
console.log(`Effective Yield: ${effectiveYield.toFixed(2)}%`);

Detailed Instructions

To calculate your effective yield, you must first collect raw transaction data. This involves identifying and querying the specific smart contracts and wallets involved in your DeFi activities, such as liquidity pools or staking protocols. You need to capture every interaction, including deposits, claims, and withdrawals.

• Sub-step 1: Identify Protocol Contracts: Locate the official contract addresses for your activities. For example, a Uniswap V3 WETH/USDC pool might be at 0x88e6A0c2dDD26FEEb64F039a2c41296FcB3f5640.
• Sub-step 2: Use a Blockchain Explorer or API: Use tools like Etherscan's API or The Graph to programmatically fetch all transactions for your wallet address (e.g., 0xYourWalletAddress) interacting with these contracts over a defined period (e.g., the last 30 days).
• Sub-step 3: Extract Key Fields: For each transaction, parse the logs to get the exact token amounts transferred, the timestamp, and most critically, the gas used and gas price paid (in gwei).

Tip: Automate this data collection using a script that runs daily. Store the data in a structured format like CSV or a database for consistent analysis.

Detailed Instructions

With your transaction data in hand, separate the yield-generating events from the fee-paying events. The raw yield is the total value of rewards or profits you earned, denominated in the token you received (e.g., USDC, ETH). Concurrently, you must calculate the total gas expenditure for all related transactions.

• Sub-step 1: Sum Token Rewards: Aggregate all incoming token transfers marked as rewards, interest, or trading profit from your data set. For instance, if you claimed 1.5 ETH and 50 USDC from a liquidity pool, note these amounts separately.
• Sub-step 2: Calculate Total Gas Fees: For every transaction, multiply the gas_used by the gas_price (converted from gwei to ETH). Sum these values to find your total ETH spent on gas. For example:

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gas_fee_eth = (gas_used * gas_price_gwei) / 1e9
total_gas_cost_eth = sum(all_gas_fee_eth)

• Sub-step 3: Convert Everything to a Common Currency: Use historical price data (e.g., from CoinGecko's API) to convert both your raw yield tokens and your ETH gas costs into USD at the time of each transaction. This creates a unified basis for comparison.

Tip: Remember that failed transactions still incur gas costs. Ensure your data includes them, as they negatively impact your effective yield.

Detailed Instructions

The core of the workflow is the effective yield calculation. This metric tells you your true net profit percentage relative to your initial capital deployed. The fundamental formula is: Effective Yield = (Net Profit / Total Capital Deployed) * 100, where Net Profit = Total Yield (USD Value) - Total Gas Costs (USD Value).

• Sub-step 1: Determine Net Profit in USD: Subtract your total USD gas costs (from Step 2) from your total USD raw yield. For example, if you earned $120 in rewards and spent $20 on gas, your net profit is $100.
• Sub-step 2: Identify Capital Deployed: This is the average value of your assets locked in the protocol during the measurement period. If you deposited 1 ETH when the price was $3,000, your deployed capital is $3,000.
• Sub-step 3: Apply the Formula and Annualize (Optional): Calculate the yield for your period, then annualize it if needed to compare with other investments. For a 30-day period with $100 net profit on $3,000 capital:

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period_yield = (100 / 3000) * 100 = 3.33%
annualized_yield = ((1 + 0.0333)^(365/30) - 1) * 100 ≈ 48.9%

Tip: For complex strategies with multiple deposits/withdrawals, use the Time-Weighted Rate of Return (TWR) for a more accurate capital measurement, which isolates your strategy's performance from the timing of cash flows.

Detailed Instructions

Manual calculation is not sustainable. To build a practical workflow, you must automate the entire process from data fetching to alerting. This ensures you can react quickly to changing network conditions and protocol performance.

• Sub-step 1: Script the Pipeline: Create a single script (e.g., in Python) that sequentially executes Steps 1-3. Use libraries like web3.py for blockchain queries and pandas for calculations. Schedule it to run daily using a cron job or a cloud function (AWS Lambda, Google Cloud Functions).
• Sub-step 2: Log Results to a Dashboard: Output your daily effective yield and key inputs (gas spent, raw yield) to a time-series database like InfluxDB. Connect this to a visualization tool like Grafana to create a live dashboard showing trends over time.
• Sub-step 3: Configure Alerting Rules: Set up conditional alerts. For instance, if your 7-day average effective yield drops below a target threshold (e.g., 5% APR), trigger a notification. You can use alerting features in Grafana or send a message via a webhook to Discord, Telegram, or email.

Tip: Incorporate real-time gas price data (e.g., from Etherscan's gasTracker API) into your alert logic. You can set a rule to pause new yield-farming transactions if the base fee exceeds a certain level (e.g., 150 gwei) to preserve capital efficiency.