> For the complete documentation index, see [llms.txt](https://docs.metric.xyz/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.metric.xyz/use-metric/provide-and-manage-liquidity/understanding-your-returns.md).

# Understanding your returns

There are two metrics we track in our UI.

* **LP earnings:** what the pool earns on each trade by pricing it away from the reference price.
* **Trading PnL:** how much more or less you have than if you had simply held the tokens you deposited, with both valued at today's prices. It includes your LP earnings.

## Trading PnL

Every trade changes your token mix. When traders buy ETH from your bins, you're left with less ETH and more USDC. Trading PnL is the value of what you hold now minus the value of what you deposited, both at today's prices:

**Trading PnL = change in token0 × token0 price now + change in token1 × token1 price now**

The changes count only what trades did to your position, including the LP earnings they leave in your bins. It can be positive or negative.

**Example.** You deposit 10 ETH and 20,000 USDC, worth $40,000 with ETH at $2,000. Traders buy 5 ETH from your bins at $2,010 while the reference is $2,000, leaving you 5 ETH and 30,050 USDC. The extra $50 is your LP earnings. Then the price moves:

| ETH price          | Your position | If you had held | Trading PnL | Vs. your deposit |
| ------------------ | ------------- | --------------- | ----------- | ---------------- |
| $2,200 (+10%)      | $41,050       | $42,000         | −$950       | +$1,050          |
| $2,000 (unchanged) | $40,050       | $40,000         | +$50        | +$50             |
| $1,800 (−10%)      | $39,050       | $38,000         | +$1,050     | −$950            |

If the price doesn't move, trading PnL is just your LP earnings. Had nobody traded, your position would match holding in every row and trading PnL would be $0. Trading PnL compares you with holding, not with your deposit: in the last row you're $1,050 ahead of holding but still down $950.

Your own deposits and withdrawals aren't gains or losses. Each one starts a new comparison from what you hold at that point, and the changes before it are valued at the prices when you made it.

## LP earnings

LP earnings are the part of trading PnL that comes from the pool's pricing. They're measured against the pool's reference price: if a pool buys a token for $999 while its reference is $1,000, the pool earns $1. LPs keep what's left after the curator's and Metric's shares; see [Fees](/use-metric/fees.md).

The APR in the Metric app annualizes the last 24 hours of LP earnings, after those shares. A 7-day figure is also available from the API (`aprBps7d`). It's a past figure, not a forecast, and it leaves out price moves, so it isn't your total return.

## Why price moves can outweigh LP earnings

LP earnings are locked in when a trade executes, but the tokens you received keep moving with the market. If the token bought for $999 is later worth $1,010, it's $11 above its purchase cost; at $990, it's $9 below, despite the $1 of LP earnings. In the example above, $50 of LP earnings becomes −$950 of trading PnL after a 10% rise.

That's why a good strategy with positive LP earnings can still lose money for a while: every trade leaves you holding more of one token, and nobody knows where prices go next. In the short run, price moves dominate. Over many trades, LP earnings add up while price moves partly cancel out, so in a correctly set-up pool, LP earnings should dominate. But LP earnings are only as good as the reference: if it's off, positive LP earnings can hide losses to traders who know the real price.

{% hint style="warning" %}
**Positive LP earnings don't mean you're making money.** You can still lose money providing liquidity, including your entire deposit. See [Risks and safeguards](/use-metric/provide-and-manage-liquidity/risks-and-safeguards.md).
{% endhint %}

Related: [Fees](/use-metric/fees.md) · [Risks and safeguards](/use-metric/provide-and-manage-liquidity/risks-and-safeguards.md).