Yield Yak Improves Farm APY Calculation

Published on: 05.01.2022

Yield Yak displays returns from actual and recent performance

Yield Yak calculates APY figures based on historical results. Yield Yak calculates yield differently to most defi applications. The usual method for displaying APY is an estimate based on rewards emissions and current reward price irrespective of any other factors.

Yield Yak uses historical data to show returns considering all other factors, including fees and slippage. Using the actual returns provides a more complete indicator of performance than simple estimates with current prices and reward emissions. Yield Yak APYs are impacted by many things, including:

1. Reward token emissions and prices

2. Deposit/withdrawal activity on underlying farms

3. Trade execution costs (vs market price)

4. Overall C-Chain activity for block-based rewards

5. Frequency of reinvestments as affected by gas costs (i.e. AVAX price and market gas prices) and community activity

6. Platform fees

Simple reward estimates do not take these factors into account which influence the actual returns achieved by users. YY is generally conservative with its published figures.

The Drawbacks of Historical Data

The downside of calculating rewards with historical data is that YY returns often do not match the reward estimates displayed on underlying farms. This tends to be a source of confusion for new users.

For example, if a reward token quickly doubles in price. YY displays the X% it achieved based on historical data whereas the underlying farm now displays 2X%.

This might also happen in case of a change to reward emissions, like this recent example:

APY calculations are a function of slope, which changes based on date range

The orange lines represent data for APY calculations. The dashed line uses the complete history of returns. The solid line uses more recent data, after an emission change. Different time ranges produce different results.

Adding Weight to Recent Returns

In the past, YY displayed APY based on a linear calculation using up to the 25 most recent data points. This means, it might take many hours or even days to reflect substantiative changes to returns on underlying farms.

Today’s release adds weight to the calculation, meaning that the most recent data points are considered more heavily in the calculation compared to less recent data. YY now reflects changes to underlying farm yields much faster while still taking a conservative approach to evaluating rewards based on actual performance.

The following formula shows the weighted calculation, where ROI is how much a given reinvest increased the value of deposits. For example, if a reinvest increased deposits from 100 to 101, ROI is 1%. APY is calculated as a function of the weighted result and time between reinvests.

Yield Yak’s Weighted Formula

“what this does is point out a sudden increase or decrease in APY faster. but still conservative if compared to the market.”
— SlowCheetah, Yak Dev

About Yield Yak

Yield Yak makes numbers go up. Ape into new autocompounder farms with quick releases and high yields. Swap on Yak for the best prices on trades with zero aggregator fees. Sit back and just earn, including big APYs on stablecoin farms.