Yield
The following documentation explains how the displayed yield is estimated.
Last updated
The following documentation explains how the displayed yield is estimated.
Last updated
The protocol generates APY from yield-generating instruments, primarily funding rates and spot GLIF.
The APY estimate that is displayed is based on a 30-day rolling window. The APY is derived from the Internal Rate of Return (IRR), which accounts for the time-adjusted returns from the protocol's token flows over the time period.
The estimated IRR is the discount rate that makes the Net Present Value (NPV) of token flows equal to zero. The NPV is:
Where:
is the token flow at time ,
is the internal rate of return () solved for,
is the time index,
is the total number of time periods.
The net token flow is computed as the change in TVL minus the change in yield:
These token flows are then used to calculate the over the 30-day period.
The Annual Percentage Yield (APY) is calculated based on the 30-day using the following formula:
Where:
is the internal rate of return over the 30-day window,
adjusts the 30-day return to an annualized return.
This method an up-to-date yield estimate that reflects the protocol's most recent performance, using a rolling 30-day window of token flows. The resulting APY gives a comprehensive measure of annual returns, incorporating compounding effects and time-based adjustments.