About APY
TheForce.Trade DeFi app offers a zero-fee auto-compounded yield farming features for all users. So what's the difference between APYs from different platforms?
To illustrate the difference, we use an example where a yield farming pool gives 100% APR. Note the difference between APR and APY is that APY takes into account compounding, but APR does not.
So if you stake $2,000 worth of tokens in a pool with 100% APR, here is what you get:
- Daily APR: 100% / 365 = 0.27%
- Daily Rewards: $2,000 * 0.27% = $5.4
- Yearly Rewards: $2,000 * 100% = $2,000
- Total Assets after on year: $2,000 + $2,000 = $4,000
- Yearly APY: $4,000 / $2,000 - 1 = 100%
Then things get interesting if you harvest your yields every day, and then put the rewards back into the pool. So you'll have:
- Daily APR: 100% / 365 = 0.27%
- Daily Rewards: 0 (because all rewards are reinvested)
- Yearly Rewards: $2,000 * ((1+ 0.27%) ^ 365 -1) = $ 3,351
- Total Assets after on year: $2,000 + $ 3,351= $5,351
- Yearly APY: $5,351 / $2,000 - 1 = 167.5%
As you can see above, if the rewards are reinvested on a daily basis, your APR would be higher.
With the farming pools on our platform, all pools are automatically reinvesting the yield farming rewards back into the pool every few hours (which means even higher APR than daily reinvesting). Unlike farming pools on other platform like PancakeSwap, our users will not be able to see your pending rewards because the rewards are converted into the asset tokens and put back into the farms again to generate compounded returns. What our users will see, however, is that their deposited token balance will increase with time.
Last modified 1yr ago