50% APY. Is it possible ?
Today I made a closer look on WLEO-ETH trading pool, on UNISWAP. The figures are very nice, $366497 liquidity pool size as I'm writing this.
No doubt the highly motivating introduction post by @Khaleelkazi on Friday did it's job well.
Look at the title - "Earn a 50% APY on WLEO...".
Impressive, right?
Although Khal cautiously avoided to state in his post, that this reward levels are waiting for all participants, the "click byte" style title seems was a clever move.
But is it real?
Theoretically - YES.
Practically - most likely you can end at half way from it (in most cases)
The very useful excel type LP incentive simulation tool was provided in advance, which allowed to simulate various scenarios. In any case, we do not have any other formulas of the algorithm, so this is the only source of information to it, anyway.
As pool has already made such an overwhelming START, I think now it is safe to reveal some of my findings.
The original Excel simulation table was not very convenient to use, as you must enter variables on one sheet (SETTINGS), and see the results on the other (TOTAL POOL RESULTS). Which makes you switching between sheets back-and-forth all the time. But since all is done with simple formulas, not any fancy scripts or other programming - it does not took me long to make my alternative ENTRY cells on Sheet-2, and relink them accordingly into sheet-1 (SETTINGS). This allowed very quickly change all possible & imaginable values for the (SETTINGS), and instantly see the results on sheet-2
So is 50% APY possible?
YES. But in which scenarios?
Let's make some assumptions which will reduce variables, so we can see and describe the results
Scenario #1 All my participants are just super aggressive as I am, and will stay in the pool NON-STOP from day-1*
In such case, No matter how long we stay in the pool, and what share % everyone keeps, APY depends totally from the pool size ( as total reward pack is fixed), Some examples:
Pool size ... APY % $70K ... 87% *$122K... 50% $150K... 40.7% $200K... 30.5% $250K... 24.4% $300K... 20.3% $400K... 15.3% $500K... 12.2%
Again, here it does NOT matter how long you stay, and what % of the pool you share.
Competition from rivals is TOUGH (and expect as such), so once the pool size goes >$122K, you may forget about 50% APY
Scenario #2 Participants come and go (realistic distribution), pool assumed is fixed at certain levels ($350K, $400K, $500K), so I'll try to see my APY vs my piece size of the pie.
I don't know fancy formulas or programming in excel, so I went very simple way - hitting the F9 refresh button dozens of times, while watching what the MIN and MAX values of the resulting cell go :)
The trends are rather clear:
| pool/share size | 2% | 10% | 20% | 33% |
|---|---|---|---|---|
| $350000 | 22-53% | 21-50% | 20-32% | 18-28% |
| $400000 | 21-42% | 20-40% | 19-30% | 17-26% |
| $500000 | 18-38% | 17-37% | 16-26% | 15-22% |
I was specially interested to keep a minimum 33% of the pool, but after theses simulations I clearly see - the bigger I go, the smaller my APY drops. Someone with 15 times smaller share (2%) in the pool gets 1.5-2 times better APY ๐ข Probably I have to reconsider my initially planed ratio of my STAKED tokens vs Pool's LP tokens. ๐ค
Conclusion :
the smaller you are, and the smaller the total pool size is - the bigger the chance to get that sweet 50% APY sometimes.
But only on certain days, as participants come and go, and recalculations will be done, as I assume, after every day's snapshot.
So far we see only one tiny removal from the pool. If everybody stays here NON-STOP, we get scenario #1, and will have to be satisfied with only 15% APY. Meet the reality, Lions ๐
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