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Yield Farming
Yield Farms allow users to earn CAKE while supporting PancakeSwap by staking LP Tokens.
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.
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?
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.
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
Last modified 11mo ago