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Encyclopedia DeFi · Entry 147

Projected and realized yield: measuring what actually happened

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Key facts for Projected and realized yield: measuring what actually happened
FactDetailSource
Compounding inputsPrincipal, interest rate and compounding frequency determine the illustrated compound-interest calculation.[1]
CurrencyToken units and their market-valued amount are separate quantities.[4][2]
Rate changesAave reserve rates can change with utilization and governance parameters.[3]
01

More tokens can still mean less dollar value

Suppose a position starts with 100 tokens valued at $2 each and ends with 105 tokens valued at $1.50 each. Token units rose 5%, but the ending value is $157.50 against $200 initially, before costs and other cash flows.

The example shows denomination risk, not a forecast. Report both the asset-unit change and the valuation basis.

02

Deposits and withdrawals are not investment earnings

If more assets were added during the period, a larger ending balance does not by itself measure return. Keep contributions, withdrawals, claimed rewards and remaining shares separate.

A reproducible report specifies its method and dates. Comparing wallets with different cash-flow timing requires more care than subtracting two balances.

03

Expose the assumptions behind an annual rate

State whether the rate extrapolates a recent window, assumes compounding or values future incentive tokens at today’s price. Include costs that affect the holder’s outcome.

An annualized display can be useful for comparison when methods match. It should not be labeled a verified future return.

Direct answers

Questions people ask

Is an unclaimed reward automatically realized profit?

No. It may remain an asset exposure with uncertain sale value and claim costs. Define whether the report measures accrued token rewards, claimed units or net proceeds in a chosen currency.

Inspect the evidence

The answer and key facts have stable claim links. These records retain the scope and qualification when reused.

Projected yield estimates a future or annualized outcome using assumptions. Realized return measures what happened over a defined holding period after accounting for relevant cash flows and costs. A position can earn more token units while losing value in dollars, so the unit of measurement must be explicit.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.

Link to this claim
Compounding inputs: Principal, interest rate and compounding frequency determine the illustrated compound-interest calculation.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.

Link to this claim
Currency: Token units and their market-valued amount are separate quantities.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.

Link to this claim
Rate changes: Aave reserve rates can change with utilization and governance parameters.

Scope: DeFi · data through 2026-10-02. Verification: verified · 2026-10-02T18:15:18.493Z.

Link to this claim
Revision history
  1. — First publication after primary-source research and independent automated verification.

Source register

Sources and references

Retrieval dates and locators are recorded individually.
  1. How does compound interest work?Consumer Financial Protection Bureau

    The arithmetic effect of compounding at a stated hypothetical rate.

    Locator: Compound interest; Examples · Retrieved: 2026-10-02T17:21:46.950ZOpen source
  2. DefiLlama: How we calculate TVLDefiLlama

    Provider-specific valuation scope and TVL methodology.

    Locator: Total Value Locked · Retrieved: 2026-10-02T17:03:46.209ZOpen source
  3. ReserveAave

    Reserve LTV, liquidation threshold, borrow availability, caps and rate parameters.

    Locator: Key Reserve Parameters; Dynamic Parameters and Governance · Version / scope: Aave V3 documentation · Retrieved: 2026-10-02T17:03:44.647ZOpen source
  4. ERC-20 Token StandardEthereum Improvement Proposals

    Token supply, displayed units and balance accounting.

    Locator: totalSupply; balanceOf; transfer; decimals; approve; allowance; transferFrom; Transfer · Version / scope: ERC-20 · Retrieved: 2026-10-02T17:03:45.826ZOpen source
  5. Tokenized VaultsEthereum Improvement Proposals

    Assets, shares, deposits, withdrawals, limits and preview rounding.

    Locator: Specification; Security Considerations · Version / scope: EIP/ERC-4626; retrieved document hash recorded · Retrieved: 2026-10-02T17:03:42.366ZOpen source
How this article was made

Research and drafting use AI assistance. A separate automated review checks claims against primary sources; no external expert or named human review is implied. Publication, substantive editing, source retrieval and verification are recorded separately. This version was independently checked by an automated reviewer on 2 October 2026.

Editorial method and corrections

Degrees of Satoshi editorial project. “Projected and realized yield: measuring what actually happened.” Published 2026-10-02; updated 2026-10-02. https://degreesofsatoshi.com/encyclopedia/realized-vs-projected-yield/