How to calculate curation APR for tribe tokens ?
After my last post somebody asked me on Telegram to explain how I calculated APR for curation of tribe tokens. I started to answer and soon realized that it would be easier to write a post about it. Here you have the according post...
I think there isn't only one way to calculate the APR for curation and probably the results might also differ from one way of calculating to another. I will present you one way of doing and also supply the resources where I take the information from.
The indicators
I will need several indicators to make the calculation. Here again it's possible to find these indicators in other places. What is important is that I select one single account to make my calculation.
As an example, I will do it for the token CTP with my specialized account @achim03.ctp
The stake in the tribe token (stake)
This is the effective number of tokens that I have staked. To this number I add the stake that is delegated to me and deduct the stake that I have delegated out. I don't really know how to deal with pending unstakes because I don't know how they affect the results. So I try to avoid to calculate the curation APR with an account that has pending stakes.
I can find this information in https://tribaldex.com/wallet/
For our example:
The account has a stake of 18'806 token, 3417 tokens incoming delegations and 11'000 outgoing delegations. The stake that is voting is therefore: 18'806 + 3417 – 11'000 = 11'223
The voting stake
Now that we have the effective stake we need to multiply it with the voting power that the account has in the tribe token that we want to analyse.
For that I can have a look at the front-end of the tribe. To get the voting stake, I need to multiply the voting power with the stake.
The front-end for the CTP token is ctptalk.com. I can find the information on the top right. In this case it is 96.22%. The voting stake is therefore: 11'223 x 96.22% = 10'798
It's important to take the voting power from the front-end of the tribe and not from peakd or hive.blog because there you would get the voting power in Hive and not in the tribe token.
The vote value
Still on the front-end of the tribe I give now a full upvote with my account and I see the estimated value of my vote.
If I give a full upvote with my account, the value I give to the post will be 2.730 CTP
The calculation
I have now all the indicators necessary to calculate the APR. However, I also need to know the percentage of the post rewards given to curation. I couldn't really find a place that gives this information. Most of the tokens have a 50/50 split. CTP has a 60/40 split.
To calculate the APR, I first look at how much my votes would generate value over a whole year. I could give 10 upvotes per day every day of the year. 40% of this value (for CTP) would come back as curation rewards.
Income curation rewards = Vote value 10 365 * 0.4 (or 0.5 if the split is 50/50)
In my example it would be 2.730 * 10 365 0.4 = 3'985.80
Next I can calculate the final APR for curation:
Income curation rewards / voting stake
For our example it would be 3'985.80 / 10'798 = 36.9 %
This calculation isn't extremely precise because the value of the payout might evolve over the payout period. In my opinion it can be considered to be a good indicator to evaluate the curation APR for a certain token. This can give you an answer for example whether it's more profitable to curate with your stake or to put your tokens as liquidity in a Diesel Pool.
Will you try to calculate the curation APR of a certain token? If you do, please share your results in a comment.
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