Yield Farms allow users to earn CST while supporting CryptoSwap by staking LP Tokens.
Yield farming usually offers better rewards than Pools, but it comes with the risk of Impermanent Loss (IL). What is IL? Take some time to learn about this important trading concept before you get started.
Yield Farm APR calculation includes both the rewards earned through providing liquidity and rewards earned staking LP Tokens in the Farm. Rewards earned by LP Token-holders generated from trading fees are included in Farm APR calculations to better reflect the expected APR for Farm pairs.
Below is a basic explanation of how APR is calculated.
In the image above of the WBNB/BUSD pair, we see these values:
Liquidity: $387.42M Volume 24H: $96.97M Volume 7D: 709.73M
To calculate the APR, first we take the 24hour volume, $96,970,000, and calculate the fee-share of LP-holders, 0.17% [$96,970,000*0.17/100 = $164,849].
Next, we estimate the yearly fees based on the 24h volume [$164,849*365 = $60,169,885].
Now we can calculate the fee APR with yearly fees divided by liquidity [($60,169,885/$387,420,000)*100 = 15.53%]
With the fee APR, we can add the fee APR (15.53%) and the Farm staking APR (20.08%) to get the new total APR [15.53%+20.08% = 35.61%].