Beefy Finance is a yield farming optimizer for Binance Smart Chain. https://app.beefy.finance
PancakeSwap Flip CAKE, collect SYRUP and stake them with Pancake Swap, claim to be the best decentralized exchange on Binance Smart Chain.
Tell me how much cash I will make from my farming.
Have you ever wondered what all those percentage calculations next to your yield farming deposits on pancakeswap and beefy finance? Is there a way of finding out exactly how much you will make from a stable farm yield over the course of time? Well the answer is yes!
The secret is knowing how different apps calculate their percentages.
Let’s start with PancakeSwap helped out with some examples.
Pancake Swap — how much will you make?
For the sake of simplicity we’ll use two farm pools i.e pancakeswaps own CAKE-BNB and the new DEXE-BUSD pools.
Let’s take the Cake Farm first its got a whopping x40 multiplier on it!
So immediately we can see there are a few different percentages referred to in their calculations. APR, APY and ROI.
APR (Annual Percentage Return) does not take into account the compounding of interest within a specific year. It is calculated by multiplying the periodic interest rate by the number of periods in a year in which the periodic rate (ROI) is applied. It does not indicate how many times the rate is applied to the balance.
APY (Annual Percentage Yield) does take into account the frequency with which the interest is applied — the effects of intra-year compounding.
So as you can see on the APY breakdown it is assuming that you will pool the interest into the farm once a day which doesn’t normally happen since most peoples’ daily yields aren’t high enough to compensate for the staking gas fees. Therefore the actually return from you investment daily would be more like the APR divided by 365days.
CAKE-BNB LP DAILY YIELD ON $1000
If you were to stake $1000 of CAKE-BNB LP tokens you would expect to see a daily return of ($1000 / 100) x (102.9/365) = $2.82 per day in interest. Over the course of a year that would be $1029.30 from your initial $1000 deposit!
Let’s look at the second example — DEXE-BUSD
If you were to stake $1000 of DEXE-BUSD LP tokens you would expect to see a daily return of ($1000 / 100) x (349.88/365) = $9.58 per day in interest. Over the course of a year that would be $3498.80 from your $1000 deposit!
Not a bad return. But it still isn’t compound interest. Unless you pool your profits back into the farm you will only ever get $9.58 a day.
This is where Beefy.Finance comes in.
How to automatically compound your profits.
Beefy Finance uses the same farming pools as Pancake but unlike Pancake, Beefy has done the hard work for you and set up a system that automatically compounds your earnings so you are pulling yields form your initial deposit as well as your profits. Completely maximising your profits.
To calculate the true benefit of this we will need to use a compound interest calculator. There is an excellent one you can access online — https://www.thecalculatorsite.com/finance/calculators/daily-compound-interest.php
Let’s take the same two examples and see what happens when we use the Beefy farming pools instead.
CAKE-BNB LP Farm using Beefy.
The APY is much higher than what is shown on PancakeSwap that is because it has already calculated the compound interest over a year. To work out how much you’ll make in profit you can use the calculator I have linked above with the Daily APY.
I’ve input the deposit amount $1000, the daily interest rate from the Beefy farm status bar (0.36%), the term of calculation (1 year) and then hit calculate the end result is this:-
Investment value after a year = $3712.26
Therefore total profit is = £2712.26 a massive 271.2% profit. Note that this is different from what Beefy indicate in their status bar for the farm (275.14%). This is because the daily rate of 0.36% is rounded down to two decimal places.
How is it that Beefy shows much higher APYs for its farming pools when its using exactly the Liquidity Pool tokens as you would use in PancakeSwap?
Well its because they auto compound the interest!
Example 2: DEXE-BUSD LP on Beefy.Finance
Using the compound calculator linked above I can ascertain that using this farm I would make:
This is an incredible rate of return from a farm.
Sadly however, we won’t see this kind of profit from the DEXE-BUSD farm — for two reasons. Firstly the APY fluctuates, the more popular it gets the lower it becomes. The second reason is that this farm is time limited to two months only (finishing 1st May 2021). So you’ll only get a two months worth of interest. Guess what? You can calculate two months on the compound interest calculator. ($748.28 profit from a $1k deposit in two months).
Using a compound interest app like Beefy will always give you more profit. Its a no brainer and there are no downsides really. Doing your own research on what farms to use and where you stake your liquidity is super important but playing the field when it comes to farming apps is definitely worth doing. Keep an eye out for other farms for the DEXE project. Head to their telegram channel for the latest updates.
Thanks for stopping by. I hope you found it helpful.
Dexe.network is a decentralized social trading platform that operates via autonomous smart contracts and includes tools for virtual currency allocation and automatic rebalancing. It eliminates the risks of transferring digital wallet details such as private keys and API or any virtual currency data to a third party. Most importantly, the DeXe Network connects successful traders and followers in a transparent, verifiable way for the benefit of both groups.
Beefy.finance was created by a team of developers whose mission is to make the whole DeFi sustainable in the long-term and easy for anyone to participate in. They are inspired by the yield optimization projects created by Andre Conje’s yearn.finance and are bringing those mechanisms to the Binance Smart Chain (BSC) and PancakeSwap.
PancakeSwap is a decentralized exchange for swapping BEP-20 tokens. It is a Binance Smart Chain-based DEX launched by anonymous devs with a penchant for breakfast foods and rabbits. It looks a bit like Ethereum’s SushiSwap (community governance, the ability to farm liquidity provider tokens), but also incorporates many other features that let you earn rewards.
Stay tuned for more info on DeXe.
DEXE Website: https://dexe.network
DEXE Official telegram channel: https://t.me/Dexe_network
DEXE Official telegram EN chat: https://t.me/dexe_network_official_chat
DEXE Facebook: https://www.facebook.com/dexe.network
DEXE LinkedIn: https://www.linkedin.com/company/dexe-network
DEXE Twitter: https://twitter.com/DexeNetwork