> For the complete documentation index, see [llms.txt](https://docs.xspswap.finance/xswap-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://docs.xspswap.finance/xswap-protocol/products/v2-dex/yield-farming.md).

# Yield Farming

***For V3 Yield Farming Instructions, click*** [***here.***](https://docs.xspswap.finance/v3/v3-dex/v3-farming) 

Yield Farms allow users to earn XTT while supporting XSwap DEX by staking LP Tokens, XSP2.

Check out our [How to Use Farms guide](/xswap-protocol/products/v2-dex/yield-farming/how-to-use-farms.md) to get started with farming.

**NOTE:**

Yield farming can give better rewards than Staking, but it comes with a risk of **Impermanent Loss**. It’s not as scary as it sounds, but it is worth learning about the concept before you get started.

Check out this great [article about Impermanent Loss](https://academy.binance.com/en/articles/impermanent-loss-explained) from Binance Academy to learn more.

## Reward calculations

Yield Farm APR calculations include both:

* **LP rewards APR** earned through providing liquidity and;
* **Farm base rewards APR** earned staking LP Tokens in the Farm.

Why? Because when you stake your LP Tokens, XSP2 in a farm to earn XTT, you're still providing liquidity to the liquidity pool, so you earn LP rewards as well!

So how do we calculate those figures?

### Calculating Farm Base Reward APR <a href="#calculating-farm-base-reward-apr" id="calculating-farm-base-reward-apr"></a>

The **Farm Base APR** is calculated according to the farm multiplier and the total amount of liquidity in the farm -- this is the amount of XTT distributed to the farm.

<figure><img src="/files/xKbdn60SM1ModKFdrNDo" alt=""><figcaption><p>Farm Base APR</p></figcaption></figure>

### Calculating LP Reward APR <a href="#calculating-lp-reward-apr" id="calculating-lp-reward-apr"></a>

On top of that, farmers receive **LP rewards** for providing liquidity. Here's an example of calculating **LP rewards**:

In the XTT-WXDC pair, we see these values:

<figure><img src="/files/kl3zzLClagSrti31ExM0" alt=""><figcaption></figcaption></figure>

In the XTT-WXDC pair above, we see these values:

**Liquidity:** $364,510\
**Volume 24H:** $4,785\
**Volume 7D:** 40,491

* Calculate yearly fees
  * Use the 24H volume to calculate the **fee share** of liquidity providers in the pool (based on the 0.214% trading fee structure):\
    $4,785\*0.214/100 = **$10.234**
  * Next, use that **fee share** to estimate the projected **yearly fees** earned by the pool (based on the current 24h volume):\
    $10.234\*365 = **$3,737.56**
* We can now use the yearly fees to calculate the **LP rewards APR:** That's **yearly fees** divided by **liquidity:**\
  ($3,737.56/$364,510)\*100 = **1.025% LP reward APR**