The calculations and main research Yearn.finance-let’s do some math!
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There is a reference to the method of calculation which we’ll review today.
To calculate yVault ROI, we can get increments in one block (from the contract). Then, knowing the number of blocks per day/week/year (1 block per 15 seconds approx.), we can extrapolate. The greater the difference (distance) between blocks, the more accurate the calculation will be.
Calculating the derivative (change rate) for one block
With this value, we can multiply it by the number of blocks per day, month, year and approximate its growth for this timeframe.
The further apart from each other the selected two blocks are, the more representative the value becomes, simply because we minimize the risk of ‘misses’ in our calculations (for example, when implementing a new strategy).
Example:
If two weeks ago we had put $100 in yVault for yCurve and assuming that the price at that time was 1.044, the block number is 10691879.
This would mean that our initial tokens would have been reduced to:
$$
i = f(p)/p(b) = 100/1.044 = 95.78
$$
Current values - price: 1.052 and block number 10692012.
Therefore the derivative is calculated using two weeks as the timeframe:
$$
\\
p`(b) = \frac{1.052-1.044}{10692012-10611372} = 0.00000099
\\
$$
Then it is a very approximate derivative of the blocks of our tokens.
Multiplication by blocks / 2 weeks:$$
0.000000099 * 80640 = 0.00798336 \ or \ 0.00798336 * 100 \approx. 0.8\%
$$
So, the weekly payback ratio is 0.8%.
To check this value, we take it and multiply it by our initial deposit of $100 and then check it against the formula.
$$
100*1.008 = 100.8
\\
\approx.
\\
95.78 * 1.052 = 100.73
$$
Which is an acceptable approximation.
Additional information
Here you can learn the standard information by volts and watch APY and ROI
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Thanks for reading the article!
The article is written by Natalia Semerikova and Mr. Anton Dziatkovskiy, the co-founder and CEO of Platinum Software Development Company.
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