How is the staking reward calculated/distributed?

General Chat
1

I’ve read Yearn making about $70K profit per day and there are currently 8259 YFI staked.

70000 / 8259 = 8.475 yCRV / per staked YFI / day
but yieldfarming.info is showing around 1 yCRV per YFI for the daily reward estimate?

Am I missing something in the calculation, are any of these numbers wrong, …?

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2

I.e., it’s a bit more complicated.

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3

So the $70K daily has to be divided again over 7 days = 10K per day currently.
And since the rewards only started a few days ago, there is currently no compounding yet of 7 day rewards.

So once the first 7 days have passed, it will be rewarding the ‘full’ rewards, assuming ygov.setRewardDistribution & controller.setRewards are called every 24h?

Am I getting that right?

4

Also, you need to take into account that the 70k figure was calculated summing all the fees from all vaults, but as you can see in the post all the coins that are not yCRV are still accumulating in the treasury vault waiting for a bot to liquidate them for yCRV to send them to stakers. Each time ToVoters() is called only the yCRV is moved to be distributed to the stakers, the others coins like stable coins and YFI need to be converted to yCRV to be able to distribute them to stakers as well.

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5

Thanks for the explanation, so in short, the current numbers are not really representative yet :slight_smile:

6

Thanks - made a lot of sense

7

Really good answer, solved a lot of doubts of mine.

Also, @Kwadrax , where did you get the 70k info? Is it up to date? (:

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Some numbers were floating around on twitter … Messari did a report (paywalled) but in the tweet
they are talking about $21 million annualized, coming out at about $59K / day
(instead of the 70K that was floating around earlier)

This is without the money going to dev and expenses but those are relatively small.

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So, I was doing some math and got to these numbers:

If we assume a 10% usage to liquidity and a 0,04% fee on that usage, meaning 1,00 USD for every 2500 USD in usage, and assume a 8600 YFI on gov that will share the earnings, we can expect:

For every 1 Billion USD of liquidity, we can expect to earn around 4,60 USD daily per YFI token used in governance.

Which means that in a 365 days time period, we might be able to reach 1700 USD.

Which also implies that at 14.000 USD per token we are running at 8,23 P/E with the parameters above.

And we are already at 750 million USD mark…
If this was a stock with clear and easy information on operation, it would be a hell of a purchase.

Note1: at 10 Billion USD of liquidity with the same prameters above, we would invest 14.000 USD in one whole YFI token to receive in a year 17.000 USD.

We should really consider voting on raising the limit of our governance vault…

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I’m not sure how you’re arriving at 1,700 USD in rewards per YFI per year. I’m coming out with about 740 USD per YFI per year atm.

Also. Isnt the 50-70k figure, daily yield?
It’s a curious thing. Sadly I’ve no time to dig into it but am very interested in learning more.

Transparency is trust.

…just out of curiosity, are rewards that are not distributed to governance recycled back into play to compound further?

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the goy rewards is today at 5.80% yearly ROI. About $800 per YFI.

the point is however this ROI is calculated using a Daily estimate of 18866.85 yCRV. I don’t know where he is calculating $70k profit daily. where is the source?

12

Actually I’ve specified conditions to that example in the post.

For today’s numbers:
800.000.000 USD @ 2% liquidity usage
0,04% fees on that usage = 6400 USD daily total
Divided by 8600 YFI in governance, we’d get 0,74 USD/day/YFI in governance or 271 USD in 365 days (aka one year).