APY Calculation

Educational guide on how rates may be calculated at Harvest

Important Disclosure:

The stated AP[[R]/[Y]] (the 'Rate') is denominated in terms of [RELEVANT TOKEN], not USD or other fiat currency. The Rate is a forward-looking projection based on good faith belief of how to reasonably project results over the relevant period, but such belief is subject to numerous assumptions, risks and uncertainties (including smart contract security risks and third-party actions) which could result in a materially different (lower or higher) token-denominated AP[[R]/[Y]]. The Rate is not a promise, guarantee or undertaking on the part of any person or group of persons, but depends entirely on the results of operation of smart contracts and other autonomous systems (including third-party systems) and how third parties interact with those systems after the time of your deposit. Even if the Rate is achieved as projected, you may still suffer a financial loss in fiat-denominated terms if the fiat-denominated value of the relevant tokens (your deposit and any tokens allocated or distributed to you pursuant to the Rate) declines during the deposit period.

APY computation formulas

Below is the description of how the displayed APYs currently computed. All computations are performed on our back-end APY and are cached for the duration of one hour to reduce the server load and prevent from the web3 provider's throttling.

FARM APR/APY for pools

APR = farm_token_price * pool.rewardRate (per second) * 604800 seconds * 52 weeks / f_token_price / pool.totalSupply (of f-tokens).

APY:

1. For the auto-staking profit sharing pool: APY = APR is compounded daily.

2. For a regular reward pool (e.g., DAI, SUSHI, etc.): APY = APR is compounded weekly.

pool.rewardRate is updated whenever a pool is notified with additional FARM using the pool.notifyRewardAmount(...) method. For regular pools, it happens once per week (on the emissions day). For the profit-sharing pool, it happens daily: the weekly emissions are split into 7 equal portions, and the pool is notified daily with each portion. In addition, the profit-sharing pool is notified on every doHardWork (whenever there is some FARM bought).

Upon each notification, pool.rewardRate is calculated using the formula: (newly notified FARM + remaining prior non-distributed FARM) / pool_duration, where pool_duration is 1 day for the profit-sharing pool (for the exact code, look for notifyRewardAmount(...) of the profit-sharing pool) This leads to some fluctuations of rewardRate for the profit sharing pool, because on every notifyRewardAmount call, rewardRate is recalculated using the duration of one day and the to-be-distributed reward amount.

Farming APYs for Curve vaults

APR is calculated using the formula taken from curve.fi. It takes into account the lending APY, the price of the CRV token, the reward rate defined at the Curve controller level, the weight of the corresponding Gauge pool, and the strategy's so-called "working supply" (the invested amount). The result is multiplied by 0.7 (since 30% of the profits are shared) and compounded daily (because the underlying that is traded for is being re-invested on every doHardWork call).

Farming APYs for Sushi vaults

APR is calculated using the formula taken from sushiswapclassic.org. The only difference is that we removed the .times(3) from the formula because the Sushi website displays a three-times-higher APY due to the promised vesting. Like with other vaults, we multiply by 0.7 and compound the computation result daily.

Farming APYs for Compound vaults

APR is calculated using the Compound lending rate for the given token and the COMP distribution rate. Both are taken from Compound's API. The COMP distribution is multiplied by 0.7 because 30% of the profits are shared.

Farming APYs for other vaults

In cases when it is impossible or impractical to write a formula or an API for the APY computation (e.g., for DEGO), we take the value from the original website, multiply it by 0.7 to account for profit-sharing and hard-code it in our API. We update the hard-coded value periodically (usually, daily).