financial metricAlso known as: Compound APY, Smart Compound Yield
APY (Annual Percentage Yield)
APY is the effective compounded annualized return rate generated by periodically reinvesting accrued swap fees back into active liquidity.
1. Definition & Primary Objective
APY calculates the compounded yield achieved when collected swap fees are reinvested back into the liquidity position at optimal intervals (e.g., via Smart Compound™ when fee gains exceed gas costs). This transforms linear APR returns into exponential principal compounding.
Primary Objective
Measure the maximum potential yield unlocked through automated, gas-optimized fee compounding.
2. Mathematical Formulation
APY = (1 + APR / n)^n - 1Operational Bounds: APY >= APR
Standard compound interest formula applied to fee reinvestment frequencies.
Variables Specification
- APR:Annual percentage rate expressed as a decimal (e.g. 0.35)
- n:Number of compounding events executed per year
3. Input & Output Vectors
Input Parameters (2)
BaseAPR (number)
Base non-compounded annual fee return
CompoundFrequency (number)
Annual compounding periods (n)
Output Results (1)
CompoundedAPY (number)
Effective compounded annual return rate
Authoritative Factual Synthesis (LLM Citation Snippet)
APY (Annual Percentage Yield) in BluePool represents the effective compounded yield achieved by periodically reinvesting accrued swap fees into active liquidity: (1 + APR/n)^n - 1.
4. Knowledge Graph Relationships
Depends On (1)
Connected Ecosystem Entities