How APR is Calculated
Last updated
Last updated
APR stands for Annual Percentage Rate and is as the name suggests the rate of return you would receive over the year for staking in a given pool if the value of your capital as well as the value of the reward coin don't change in this time. At FrozenBlock Finance we also quote the daily APR which is the return you receive daily for staking in a pool, this is simply calculated by dividing the APR by 365.
APY stands for Annual Percentage Yield and is the compounded return you would receive over the year. Due to compounding APY figures quoted are higher than APRs. In FrozenBlock Finance all returns are labelled as APR not APY as rewards are not automatically compounded, if you compound your returns which we recommend you do you will have a higher yield.
You can read more on the differences between APR and APY here:
Everyday in the "Staking" section, there are 110.810592 BDAO released in total across all the pools (Not including the BDAO-BAM LP pool, BDAO for this pool is sent directly from the DAO's vested BDAO). The total amount of BDAO released per day cannot change and is hardcoded in the smart contract. What does and can change is the amount of BDAO out of this ~110 that are distributed to each individual pool, this is known as the pool weighting and can be adjusted by the dev team in order to adjust pool APRs.
Pool APRs are determined by a number of factors including the current market price of BDAO, the TVL of that pool and the amount of BDAO that gets sent to that pool each day (weighting). If the price of BDAO declines the APR will drop and likewise if the price of BDAO increases so will the APR, this is also the case if the TVL of the pool drops or increases.
(Amount of BDAO rewarded to pool per day x price of BDAO) / TVL of pool
APRs in the Boardroom are calculated differently from Staking as the reward token is BAM instead of BDAO and the amount released per day will differ depending on the circulating supply of BAM. The Boardroom also only mints new BAM when the TWAP of BAM is above 1.01.
The amount of BAM that is minted per epoch is calculated by multiplying the current expansion rate by the current circulating supply of BAM. The expansion rate of BAM per epoch can be adjusted to slow down or increase expansion.
The APR depends on the number of newly minted BAM last epoch, the price of BAM on the market and the TVL of the Boardroom which in turn is determined by the price of BDAO and the number of BDAO staked.
((Amount of new BAM minted last epoch x Price of BAM) x 4) / TVL of Boardroom
Keep in mind the above formula is simplified and doesn't take into account the compounding nature of newly minted BAM each consecutive epoch and therefore is an estimate based on the amount of new BAM minted last epoch.
To find the number of new BAM minted per epoch you need to find the current circulating supply of BAM (shown on homepage of site) and multiply this by the current epoch expansion rate.
