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Talking about yields and APY only makes sense to me in a context where you can reasonably expect to get your initial investment back
Why should you care? And how are veCRV holders playing themselves?
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Why should you care? And how are veCRV holders playing themselves?
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veCRV holders receive 50% of any swap fees from the @CurveFinance platform
Currently, 1 veCRV is "yielding" ~65% per year
1 $CRV = $0.55
Yearly earnings per 1 veCRV = $0.36
$0.36/$0.55 = 65%
Checks out, right?
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Currently, 1 veCRV is "yielding" ~65% per year
1 $CRV = $0.55
Yearly earnings per 1 veCRV = $0.36
$0.36/$0.55 = 65%
Checks out, right?
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Short answer..
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Longer answer..
Curve calculate "yearly earnings per 1 veCRV" as $0.36 by:
1) Multiplying daily fees ($14,315) by 365 to get annual fees
2) Dividing annual fees ($5,224,993) by total veCRV (14,641,000)
But, this calculation fails to take account of veCRV& #39;s decay
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Curve calculate "yearly earnings per 1 veCRV" as $0.36 by:
1) Multiplying daily fees ($14,315) by 365 to get annual fees
2) Dividing annual fees ($5,224,993) by total veCRV (14,641,000)
But, this calculation fails to take account of veCRV& #39;s decay
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Users get veCRV by locking their CRV tokens
1 veCRV equals 1 CRV locked in governance for 4 years (or 4 CRV locked for 1 year, etc)
veCRV weight declines linearly over time until the lock period ends and CRV are recoverable
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1 veCRV equals 1 CRV locked in governance for 4 years (or 4 CRV locked for 1 year, etc)
veCRV weight declines linearly over time until the lock period ends and CRV are recoverable
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So what& #39;s a reasonable way to calculate veCRV yields?
IMO it makes sense to start and end with CRV (a tradable token) and consider the overall yields earned from locking for various periods
You shouldn& #39;t consider it yield until you get your tokens back
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IMO it makes sense to start and end with CRV (a tradable token) and consider the overall yields earned from locking for various periods
You shouldn& #39;t consider it yield until you get your tokens back
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e.g.
1) Purchase 1 CRV for $0.55
2) Lock for 1 year, receive 0.25 veCRV
3) With linear decay, average veCRV holdings over year are 0.125 veCRV
4) Multiply 0.125 veCRV by $0.36 to get annual earnings of $0.045
5) Divide $0.045 earnings by $0.55 purchase price
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1) Purchase 1 CRV for $0.55
2) Lock for 1 year, receive 0.25 veCRV
3) With linear decay, average veCRV holdings over year are 0.125 veCRV
4) Multiply 0.125 veCRV by $0.36 to get annual earnings of $0.045
5) Divide $0.045 earnings by $0.55 purchase price
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Turns out if you want your CRV back in a year, your "yields" are around 8%
Rule of thumb:
Take Curve& #39;s stated veCRV APY
Multiply by years you intend to lock up
Divide by 8
Stated APYs assume users are perpetually re-locking their CRV (and consequently cannot withdraw)
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Rule of thumb:
Take Curve& #39;s stated veCRV APY
Multiply by years you intend to lock up
Divide by 8
Stated APYs assume users are perpetually re-locking their CRV (and consequently cannot withdraw)
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No shade whatsoever on the Curve team - overall one of my favorite DeFi products
But users need to take responsibility for understanding how yields are calculated
https://abs.twimg.com/emoji/v2/... draggable="false" alt="🍻" title="Anstoßende Bierkrüge" aria-label="Emoji: Anstoßende Bierkrüge">/fin
But users need to take responsibility for understanding how yields are calculated
