APR Calculation for Liquidity Pools and Positions
This page illustrates how individual APRs vary based on the proportion of active liquidity each provider contributes within the fee-generating price bin.
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This page illustrates how individual APRs vary based on the proportion of active liquidity each provider contributes within the fee-generating price bin.
Pool APR = (Fees+Rewards) / Active Pool Value
Your Position APR = (Fees+Rewards) * (Your Active Position LP Units / Active Pool LP Units) / Your Position Value
Consider a pool with three liquidity providers where the current price is in bin P.
A deposits $1000 entirely within the active price bin P and receives 1000 active LP units.
B deposits $1000, spreading it evenly across 100 bins, receiving only 9 active LP units.
C deposits $1000, but none of the funds falls into bin P, so this position is inactive and receives 0 active LP units.
The pool generated $100 in fees within bin P.
APR Calculation:
Pool APR = $100/$2000 = 5%
A's Position APR = $100* (1000 /1009) / $1000 = 9.91%
B's Position APR = $100* (9 /1009) / $1000 = 0.089%
C's Position APR = $100* (0 /1009) / $1000 = 0%
Understand the APR Calculation from a real-world example:
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