Annual Yield Breakdown, Stablecoin vs. APY Rewards & Autocompounding
Token utility developments shared in previous updates and governance proposals are now underway. In this article we aim to clarify the various measures used to break down yield, including the ‘Annual Yield’ metric displayed on the platform, the breakdown of stablecoin vs APY token yield returns, and insight into how yield is compounded.
‘Annual Yield’ Platform Metric
The ‘Annual Yield’ platform metric represents an aggregate yield calculation. This includes stablecoin yield mixed with APY token rewards accrued from our liquidity mining program, all accessible through a single deposit.
The ‘Annual Yield’ is calculated as a weighted average of all strategies determined by how much capital is proportionally allocated into each strategy and their yield returns. This metric is calculated without taking into account earned autocompounded yield, technically underestimating accrued yield, representative of an APR value, rather than APY.
Stablecoin Yield
The stablecoin yield portion of the ‘Annual Yield’ is composed of a combination of three sources of yield.
1. Base yield. Transaction fees, interest rates, etc.
2. Reward token yields. Larger yield returns earned in the form of protocol reward tokens. I.E. CRV tokens for Curve, and CVX tokens from recent Convex integrations.
3. Incentives. Additional rewards provided by protocols to further boost yield and incentivize adoption.
APY Token Yield
APY token yield is accrued in addition to stablecoin yield as part of our Liquidity Mining rewards program, forming a portion of the total ‘Annual Yield’ displayed on the platform.
APY yield is accrued, and updated, weekly, every Friday. Accrued APY token rewards are claimable following a 6-month vesting period after they are earned.
How to View Stablecoin vs. APY Yield Breakdown
You can view the breakdown of stablecoin vs. APY yield returns by clicking and viewing each individual strategy in the ‘Yield’ section of the platform.
- Log on to the dashboard: https://dashboard.apy.finance/
- 2. Head over to the ‘Yield’ tab in the header.
3. Scroll down to the ‘Strategies’ section.
4. Click each strategy to view the full yield breakdown.
Optimal Yield Compounding Analysis
The three sources of stablecoin interest yield earned through the Curve platform are accrued at different rates.
1. Base interest yield compounds automatically, block-by-block, every 15 seconds, or immediately after fees are paid.
2. Protocol rewards and incentive rewards are accrued block-by-block but are not automatically compounded.
The APY.Finance platform therefore harvests and compounds the protocol and incentive rewards to earn additional interest rate returns into the future. In an effort to optimize our compounding schedule, our Data Scientist has begun studying and simulating the underlying mechanisms, focusing on the trade-offs between gas costs and rate of returns for each strategy. We’ll be releasing the initial topline findings of the data analysis and optimal compounding rates in the near future.
Wrap-Up
We hope this article offers greater insight into how the ‘Annual Yield’ metric displayed on the platform is calculated, the breakdown of stablecoin vs APY yield returns, and how different portions of stablecoin yield returns are autocompounded.
The APY.Finance team wishes to thank you for your continued support throughout the year, and hope you’re as excited as we are for the many developments and innovations to come in 2022. 🎊
