TL;DR:

Kwizfreak has raised concerns about the current method of calculating APY (Annual Percentage Yield) in scenarios involving leverage and 'emode', arguing it doesn't accurately reflect the APY based on initial assets used as collateral. This has sparked a debate about the need for a more accurate APY calculation method, as it could significantly alter the perceived profitability of the strategy.

The topic of discussion revolves around the calculation of APY (Annual Percentage Yield) in scenarios where assets are supplied and then multiplied via leverage using a strategy involving loops and 'emode'. Kwizfreak has raised concerns about the current APY calculation method, which considers all assets in supply minus all assets in borrow. They argue that this method does not accurately represent the APY based on the initial assets put in as collateral.

To illustrate their point, Kwizfreak presents a scenario where they have 1 Aave and 1 Ajax in collateral, borrow some Dai, and put it back in as collateral, creating a loop. The APY is calculated on the total supply (Aave + Ajax + Dai) minus the APY of the borrowed Dai. However, they suggest that this calculation does not reflect the APY based on the initial assets (1 Aave & 1 Ajax) supplied as collateral.

The crux of the discussion is the perceived profitability of the strategy. Kwizfreak believes that it would be more informative to know the APY based on the initial assets supplied, as it could significantly change the perceived profitability of the strategy. For instance, an APY that appears to be 1% could actually be 20% when considering only the initial assets put in collateral^{1}. This topic has sparked a debate about the need for a more accurate and informative method of calculating APY in such scenarios.

Posted 2 years ago

Last reply 2 years ago

Summary updated 2 months ago

Last updated 06/12 00:43