Max Vaults APY Calculation

APY Calculation

The APY for Max Vaults and underlying strategies represents its annualized performance based on a trailing 7-day and 31-day period of on-chain data. This provides a current, data driven measure of the products recent performance.

The example below is based on the trailing 7-day APY calculation. The same calculation is applied to the trailing 31-day APY by changing the time parameter to 31 days. We only display the trailing 31-day APY for Max Vaults. Max Vault strategies display trailing 7-day APY data.

The calculation relies on the rate that each strategy’s provider contract publishes (e.g., getRate(asset)).

1. On-chain exchange rates

   Our system reads a strategy's exchange rate directly from its smart contract. The rate is captured at two points in time:

   • The rate from the latest block (R_now).

   • The rate from a block approximately 7 days prior (R_7d-ago).

2. Calculate the 7-Day Period Return

   Two rates are used to calculate the strategy's raw percentage gain over the ~7 day period.

$$R=\frac{R_{\text{now}}}{R_{\text{7d-ago}}}−1$$

1. Annualized return

   The below calculation is used to project this 7-day return over a 365-day horizon to calculate the APY for the strategy. This shows what the return would be over a full year if the performance of the last 7 days were to continue.

   A standard periodic compounding formula for is used for this projection:

$$\text{APY}_{7\text{d}} \;=\; \Bigl(1+R\Bigr)^{\;31\,536\,000/\Delta t}-1$$

Where 31,536,000 is the number of seconds in a year.

And Δt is the precise number of seconds that elapsed between the two blocks measured.

1. This process updates hourly, so the APY always reflects the most recent 7-day and 31-day performance data.