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  • Reward calculations
  • Calculating Farm Base Reward APR
  • Calculating LP Reward APR

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  1. Products

Yield Farming

PreviousLimit Orders FAQNextHow to Use Farms

Last updated 3 years ago

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Yield Farms allow users to earn CAKE while supporting PancakeSwap by staking LP Tokens.

Check out our to get started with farming.

Learn

Yield farming can give better rewards than Syrup Pools, but it comes with a risk of Impermanent Loss. It’s not as scary as it sounds, but it is worth learning about the concept before you get started.

Reward calculations

Yield Farm APR calculations include both:

  • LP rewards APR earned through providing liquidity and;

  • Farm base rewards APR earned staking LP Tokens in the Farm.

Why? Because when you stake your LP tokens in a farm to earn CAKE, you're still providing liquidity to the liquidity pool, so you earn LP rewards as well!

So how do we calculate those figures?

Calculating Farm Base Reward APR

The Farm Base APR is calculated according to the farm multiplier and the total amount of liquidity in the farm -- this is the amount of CAKE distributed to the farm.

Calculating LP Reward APR

On top of that, farmers receive LP rewards for providing liquidity. Here's an example of calculating LP rewards:

In the WBNB/BUSD pair above, we see these values:

Liquidity: $387.42M Volume 24H: $96.97M Volume 7D: 709.73M

  • Calculate yearly fees

    • Use the 24H volume to calculate the fee share of liquidity providers in the pool (based on the 0.17% trading fee structure): $96,970,000*0.17/100 = $164,849

    • Next, use that fee share to estimate the projected yearly fees earned by the pool (based on the current 24h volume): $164,849*365 = $60,169,885

  • We can now use the yearly fees to calculate the LP rewards APR: That's yearly fees divided by liquidity: ($60,169,885/$387,420,000)*100 = 15.53% LP reward APR

Check out this great from Binance Academy to learn more.

🚜
article about Impermanent Loss
How to Use Farms guide
how to find Farm smart contracts