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How Is the Annual Percentage Yield (APY) of a Liquidity Pool Calculated?

APY is calculated by annualizing the sum of historical trading fees and any farming rewards, divided by the total TVL.
Greeks.Live20.11.25

How Is the Annual Percentage Yield (APY) of a Liquidity Pool Calculated?

The APY of a liquidity pool is primarily calculated by annualizing the historical trading fees earned by the pool's liquidity providers, divided by the total value locked (TVL). If the pool also offers yield farming rewards, the value of those rewards is added to the fee calculation.

The calculation assumes the current rate of fees and rewards will continue for a year.

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