A TOOL FOR THE CALCULATION OF YIELD (ROI)

A cordial greeting to the entire community of hivers that make life in the great LeoFinance tribe. Today's post continues the sequence of posts written previously, in an attempt to put into words the learnings that we have personally achieved thanks to the reading of the experts consulted. Defi is a universe, and as such, we can only partially explore it and keep the worlds and concepts that we manage to assimilate and incorporate into our economic and productive work.

In the last post I told you about Hodl and I recommended a type adapted to small investors who make life in Hive. Today I am going to talk about the so-called: Calculation of Return on Investment (ROI), which is important to know, because whenever we make one or more investments it is convenient to identify the return obtained on them.

ROI is a calculation that allows us to determine the return on our investments. It is good to note that it works both for the traditional financial market (purchase of assets) as well as for Defi.

It is an excellent tool as it helps not only to know your performance but also to compare any other investment you have. In other words, it provides a level of measurement (metric) to evaluate if they are generating profits or losses from your initial investment.

It is logical to infer that all the values of this metric, if they are positive, it means that we produced profits and, of course, if they are negative, it means that we produced losses.

As I have been repeating ad nauseam, I am no expert in traditional finance and even less in decentralized finance. What I am going to present is a brief description of a tool that I think is useful for all hivers, since we are not only content producers, collectors, players and developers, but also investors. And if we do not see it this way, we are not taking full advantage of the possibilities of web 3.0.

The formula that we could define as classic, to calculate the ROI is quite simple according to the experts, it is a simple subtraction operation where the present value (Va) minus the original cost (Co) is placed, then I give them in a more simplified and synoptic way:

In a next post I promise to make some examples, or at least just one, to show graphically this useful tool, one of the many that exist and that surely the connoisseurs use every moment to know their performance.

To say goodbye, it is important to mention that although the percentage of hivers who do not invest in the platform is much higher than those who do invest, more and more of us are aware of the benefits that can be obtained by changing that mentality. And I repeat my motto: it is time to stop seeing the platform as a small box from which to make money and see it as a company in which to invest.

See you soon.