Yield Farms allow users to earn DEXO Tokens by staking LP Tokens.
Yield farming can give better rewards, 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.
While you stake your LP Tokens in a Farm to earn more DEXO Tokens, you're still providing liquidity to the respective pool, hence you earn LP rewards as well!
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 DEXO Tokens distributed to the farm.
On top of that, farmers receive LP rewards for providing liquidity. Here's an example of calculating LP rewards:
Example: Assume Total Liquidity: $387.42M Volume 24H: $96.97M Volume 7D: 709.73M
- Use the 24H volume to calculate the fee share of liquidity providers in the pool (based on the 0.17% trading fee structure): $96,970,000*0.17/100 = $164,849
- Next, use that fee share to estimate the projected yearly fees earned by the pool (based on the current 24h volume): $164,849*365 = $60,169,885
- We can now use the yearly fees to calculate the LP rewards APR: That's yearly fees divided by liquidity: ($60,169,885/$387,420,000)*100 = 15.53% LP reward AP