So many people get into DeFi because they see these crazy APYs and the whole passive income dream, only to end up making peanuts, breaking even, or sometimes losing money. Usually it’s because nobody tells them about the hidden costs.

Gas fees are the one everyone knows about, but honestly that’s just scratching the surface. There’s a lot more eating into your returns than most people realize, and I’ve broken it down into three categories.

Feel free to add something I might have missed.

1. Costs you’ll pay no matter what

Gas goes well beyond the main transaction, since approvals, claims, compounds and withdrawals all cost their own fee. L2s make that cheaper but spread you across more chains, which means bridging costs and keeping native gas everywhere.

On top of that you’ve got vault fees, validator commissions, frontend fees and baseline slippage on almost every swap.

The further in you get, the more tools you need.…