How is Net APY calculated?
DeFi Saver's interface provides you with information of your position's current Net APY. This number is an estimate of what your Net position could be worth in a year, given the current Supply APY and the Borrow APY.
Borrow APY is simple interest - basically, how much your debt will increase in a year for the specific debt type.
Supply APY is how much your collateral’s value will increase (in $) due to supplying it to the lending protocol
The Net APY is located on the right-hand side of the main dashboard of the protocol you're using:
You can track the current Supply and Borrow APY's of a specific asset under the "Market" section:
How Net APY is calculated on DeFi Saver:
For this example, we'll have a position with $24,867 worth of wstETH as collateral, and $6,999.03 worth of USDC as debt
Hovering over the Net APY percentage brings up a detailed breakdown:
To understand how these numbers are calculated, we've provided a full breakdown:
The annual [token] supply incentive interest represents the yield value on your yield-bearing token: $24,867 * 2.55% = $635
The Base annual interest is the difference between your annual supply value and your annual borrow value: ($24,867 * 0.01%) - ($6,999.03 * 5.27%) = -$366
The total annual interest is then calculated as: Annual [token] interest + Base annual interest $635 + (-$366) = $269
From there, the Net APY % is calculated as: (Total annual interest / (supply balance - debt balance) ) * 100 ($269 / ($24,867 - $6,999.03) ) * 100 = 1.51%
Last updated