A measure of profitability calculated as net gain divided by initial cost, often expressed as a percentage.
ROI evaluates how efficiently an investment returns profit relative to its cost. In crypto, traders calculate ROI on positions, miners on hardware deployments, and projects on treasury spending.
"If you invest $1,000 and later sell for $1,250, your ROI is (1,250 − 1,000) / 1,000 = 25%."
ROI ignores time and risk. Alternatives like annualized return, Sharpe ratio, or risk-adjusted metrics can provide a fuller picture. Taxes, fees, and slippage reduce realized ROI.
"Two projects may both show 50% ROI, but the one achieved in 3 months has a higher annualized return than one over 2 years."
All terms and definitions may update as the Cryptionary improves.