Yield Farms allow users to earn XTT while supporting XSwap DEX by staking LP Tokens, XSP2.
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.
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?
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.
Farm Base APR
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:
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