Yield

The following documentation explains how the displayed yield is estimated.

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 $r$ that makes the Net Present Value (NPV) of token flows equal to zero. The NPV is:

$0 = \sum_{t=0}^{n} \frac{TF_t}{(1 + r)^t}$

Where:

• $TF_t$​ is the token flow at time $t$,

• $r$ is the internal rate of return ($IRR$) solved for,

• $t$ is the time index,

• $n$ is the total number of time periods.

The net token flow is computed as the change in TVL minus the change in yield:

$TF_t=−ΔTVL+ΔYield$

These token flows are then used to calculate the $IRR$ over the 30-day period.

The Annual Percentage Yield (APY) is calculated based on the 30-day $IRR$ using the following formula:

$APY = (1 + IRR)^{365/30} - 1$

Where:

• $IRR$ is the internal rate of return over the 30-day window,

• $365/30$ 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.