This tool presents a simple point-in-time estimate of how much you could potentially earn in fees for providing liquidity on Thorchain. Use this tool to get an idea of where you want to invest, and directionally what your fee income could be. We strive to provide accurate information about the present and the past but make no guarantees about the future.
Calculation Details
How do we calculate fee income and block rewards?
avg_swap_fee = for all of thorchain, average swap fee per swap volume over the last 10 days
avg_swap_volume = for a given pool, average swap volume over the last 10 days
avg_system_reward_usd = for a given pool, average daily system rewards over the last 10 days
your_liquidity_percent = investment amount / TVL of a given pool
Fee Income = your_liquidity_percent * (avg_swap_volume * avg_swap_fee)
Your final position is made up of the following components: Swap Fees, Block Rewards, Impermanant Loss (IL) Insurance and Token Price Changes. Read on to learn about each:
Swap Fees
The fee paid by the address initiating the swap includes gas fees (3x other chain estimated gas cost, 1x goes to the LP's) + slippage fees (varible based on the swap). The average swap fee (percent of swap amount) across all pools for the last 10 days was
.
Block Rewards
Block rewards are calculated using the incentive pendulum, which tries to keep the ratio of bonded rune to pooled RUNE at 2:1. When too much RUNE is bonded, pools receive an increased share of block rewards and when too much RUNE is pooled, bond holders receive an increased share of block rewards. For this app, we calculate the average block rewards received by the pool in the last 10 days and assume that will be the block reward amount going forward. Note that the amount of block rewards distributed to each pool can and almost certinly will change over time over time, and this is one piece of this calcualtor that provides a static estimate but could benefit in the future from a dynamic forecast.
IL Insurance
Thorchain has the wonderful feature of providing IL insurance to liquidity providers. Simply, if your final token value + fees earned is less than you would have had by hodl'ing, you will be paid the difference in IL insurance. The amount that you receive is prorated for the first 100 days and this is built into the calculator, i.e. if you withdraw your position with IL after 20 days, you would be paid 20% of the total impermanant loss.
Calculating APY
For this calculator, we calculate APY simply as: fees / days / initial investment amount * 365. Note that the APY does not include any gains due to price.
Calculating 'vs. HODL'
Let's say that you deposit 442 RUNE worth $7 each and 1 ETH worth $3100. After some period of time, you now have new amounts of 350 RUNE worth $9 each and 1.26 ETH worth $2500 each, plus you've earned $400 in LP fees. Your new token amounts are worth a total of $6300, if you had held the tokens, they would now be worth $6478 (442*9 + 1 * 2500). While the token amounts are worth less than when you started (by $178) you are still considered to be up by $222 vs. HODL when fees are added in.