1. APY vs APR?

The strategies designed by Cougar perform optimally over a long period of time when the effect of compounding can be really noticed, thus being APY the most accurate to display.

It is also important to notice this displayed APY is dynamic and can change (increase and decrease) through time mainly by two factors:

  1. Price of the reward token farmed and compounded into the principal

  2. Amount of people or value locked inside the pool (usually rewards are fixed so more people or TVL implies that this reward is diluted)

Annual Percentage Rate (APR)

Refers to the simple interest accrued from a particular investment over a 1 year period.

Annual Percentage Yield (APY)

Refers to the compounded interest accrued from a particular investment over a 1 year period.

APY reflects more accurately the expected yearly returns of that investment.

More interest calculations information: Learn More

2. What is a yield optimizer?

A yield optimizer is an automated service that seeks to gain the maximum possible return on crypto-investments, much more efficiently than attempting to maximize yield through manual means. Each vault has its own unique strategy for farming, which normally involves the reinvestment of crypto assets staked in liquidity pools. At the most simple level, it farms the rewards given from staked assets and reinvests them back into the liquidity pool. This compounds the amount of interest received and increases the amount staked that the yield is based on. A yield optimizer can repeat this up to process up to thousands of times a day. This fairly simple method is the principal reason behind the large APYs found on Cougar Vault. Compounding fees are amortized among all vault participants, making it cheaper for the user.

3. How does APY work?

APY is the annual percentage yield offered from a particular investment. This takes into account compound interest, giving you an accurate idea of your returns compared to simple interest. Large APYs in the percentage of thousands are possible with investments that provide daily yields of 1% or more. Due to your liquidity pool rewards being constantly farmed and reinvested, the interest compounds on larger and larger amounts.

4. What do Vault Daily and Trading Daily mean?

Trading Daily means how much your liquidity tokens will increase in value. Liquidity pools share trading fees amongst all liquidity providers, as introduced by the Uniswap liqudity model. Trading Daily is affected by trading volume and the percentage of swap fees allocated to liquidity providers. Vault Daily means how much your token will increase in number. Due to the vault constantly farming rewards, and reinvesting that, your deposited token amount will increase. Vault Daily is affected by the yield farm rewards (i.e. additional incentives besides trading fees), such as CAKE on Pancakeswap. Trading Daily and Vault Daily can be multiplied by 365 to compute Trading APR and Vault APR. Vault APR is then converted to Vault APY to factor in compound interest. The displayed total APY percentage is calculated as follows:

A handy tool to convert APR to APY is:

5. How can I find out how much earnings I have accumulated?

You can use a DeFi dashboard that will be able to calculate exactly how much profit you have made on your investments. External tools such as Yieldwatch for BSC or PolygonDex for Polygon will connect to your wallet and give you an accurate picture of your initial investment and current earnings.

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