Vault details (APY & APR)
The earnings of autofarm vaults can be estimated through the APR and APY value displayed on their respective vault page in the vault details.
As can be seen in the vault details screenshot above, there are multiple types of APR, all summing up to the Total APY of a particular vault:
Base APR: This is calculated from the latest rewards which are harvested from the underlying farm. Farms may change the reward distribution for particular assets over time.
Trading APR: Trading fees are calculated based on the changes in the underlying token reserves of each LP token. The fees over the last 24 hours are averaged and extrapolated over a period of 1 year to calculate the Trading APR. Trading fees, hence APR, can vary significantly over time as it depends on the swap volume on the underlying exchange.
The strategies designed by Autofarm perform optimally over a long period of time, when the effect of compounding can be really noticed, thus being APY the most accurate to display.
It is also important to notice this displayed APY is dynamic and can change (increase and decrease) through time mainly by two factors:
- 1.Price of the reward token farmed and compounded into the principal
- 2.Amount of people or value locked inside the pool (usually rewards are fix so more people or TVL implies that this reward is diluted)
Refers to the simple interest accrued from a particular investment over a 1 year period.
Refers to the compounded interest accrued from a particular investment over a 1 year period.
APY reflects more accurately the expected yearly returns of that investment.