Wombex Finance

<h3 id="strong-how-does-wombex-generate-yield-strong">How does Wombex generate yield?</h3>Wombex accumulates protocol-owned veWOM position and Liquidity Providers deposits. Based on huge veWOM position and TVL, Wombex achieves high weight factor for boosting. Here is some math taken from the <a href="https://medium.com/wombat-exchange/wombat-liquidity-mining-optimize-rewards-in-the-boosting-pool-59f8024d3eb3" rel="noopener noreferrer nofollow">Wombat article</a>:<img src="https://miro.medium.com/max/1400/0*aiU0rL7pcU54nWSs" />Where w is calculated as follows:<img src="https://miro.medium.com/max/1352/0*Vo28h0sLGuV6tcJ6" />Simply — the more veWOM and Deposits (users’ TVL), the more significant the weight factor, and the bigger the number of WOM mined daily. Each pool’s weight factor is unique (such as BUSD, USDT, etc.).Now Wombex owns ~40% of veWOM locked and 92m TVL in stablecoins and BNB, having a leading position in many Wombat pools. It is the reason for substantial boost factors and WOM rewards for Wombex LPs.However, the main question that remains to be answered is: how mined WOM is distributed to LPs, and how the amount of WMX earned on top of that is calculated?<h3 id="strong-wom-distribution-algorithm-and-two-vapr-metrics-in-the-ui-strong">WOM distribution algorithm and two vAPR metrics in the UI</h3>In Wombex, all mined WOM isn’t distributed immediately to LPs. In contrast, it is distributed by portions, averaging/smoothing yield over time.How does it exactly work?Imagine that today Wombex mined 100 WOM in the BUSD pool, and you are the only LP in the protocol, which means that 100% of rewards should be allocated to you. However, there are some fees charged from this amount.<ul><li>10% of 100 WOM goes to vlWMX stakers as a protocol fee</li><li>5% of 100 WOM goes to wmxWOM stakers as a reward</li><li>0.1% goes to the harvest caller, the agent executing harvesting of WOM mined</li></ul>So, after fees were subtracted, there is 84.9 WOM left. If the reward were paid out immediately, you would receive 84.9 WOM. However, it is distributed within seven days, which means you will receive only 84.9WOM/7 &#61; 12.12 WOM today.Imagine that tomorrow, the protocol also mined 100 WOM, and you were still a single LP. It means that you should receive 12.12 WOM from yesterday and 12.12 WOM from today’s reward, giving you 24.24 in total.If the situation is the same all seven days, you will receive 12.12*7 &#61; 84.9 WOM on the seventh day, precisely as if all the rewards were paid instantly. Suppose protocol will infinitely receive 100 WOM per day, and you will be there with a single LP. In that case, you will infinitely receive 84.9 WOM per day, which means immediately paying out provides you precisely the same amount per day as a 7-day based payout.But, what happens if rewards are not stable and vary day-by-day?Some time ago, we <a href="https://medium.com/&#64;wombexfinance/wombex-digging-deeply-into-vapr-e55d6c038955" rel="noopener noreferrer nofollow">published</a> an in-depth article describing how it works. Here we will share only some excerpts.Let’s define R1 as the reward mined on the first day, and R2 on the second day. The 1/7 of R2 will be added to the payout on the second day, and the overall amount of WOM paid the next days will grow, as it is shown on the chart below:<img src="https://miro.medium.com/max/1400/0*UALVd6oSS23dobzS" />The new RewardRate will include remaining rewards from the first day reward (R1, for the example with 84.9WOM it will be 84.9–12.12 &#61; 72.78) plus new rewards mined in a day 2 (R2):​​<img src="https://miro.medium.com/max/1292/0*Ma1IEN5eYUFBzq3W" />As we already know, if reward flow is stable, the instant reward will be close to those continuously distributed over seven days.With an aim to provide more transparency to the community we updated Wombex UI and added a new vAPR metric there:<img src="https://miro.medium.com/max/1400/0*pdXRdzeQlN1DEnZk" />The Blue Pill or “left” vAPR is the current vAPR.It is those “12.12 from 84.9” from our example above. It’s not all yield earned by LPs, it’s only the number based on the current distribution. It is calculated as the current RewardRate (WOM per second) multiplied by the number of seconds per year and divided by TVL.If you claim your rewards (to make “My Total Claimable” &#61; zero), then claim new rewards in several hours, and then re-calculate it to the yearly income, you should get approximately this vAPR.The Red Pill is the vAPR liquidity provider will earn during the 7 days if the current WOM income will remain stable.It is calculated as WOM income to this pool during the last 3 hours (three harvests), recalculated into WOM/sec, and then multiplied by the whole year and divided by TVL. In the case of stable WOM income, the “immediately” paid out yield is exactly the yield paid out in 7 days (see the example above); we use instantly measured yield as a metric for seven days’ full yield.<blockquote>So, when you see 13% and 22% vAPR in BUSD it means that you will earn 13% today, but total amount in 7 days should be 22%</blockquote>Wombex Pools reward rates: <a href="https://dune.com/wombex_finance/wombex-pools" rel="noopener noreferrer nofollow">https://dune.com/wombex_finance/wombex-pools</a>What does it mean for liquidity providers and for the protocol in general?First of all, it means that real APR Wombex LPs earn is around 22–25%. But, to earn this high yield you need to be in the pool at least 7 days.<blockquote>If user moves liquidity to Wombex, and then leaves the platform, there is some terminal value left or rewards that will be distributed to LPs that still remain in the pool.</blockquote>For the protocol, it helps to maintain users’ retention and TVL:If for some reason rewards will drop, the protocol will be able to pay moderate rewards for some time (at least several weeks), and it will save TVL while the community will figure out what to do (attract more veWOM or add new more profitable pools, etc).It works as a self-balancing TVL mechanism. If TVL drops (some LPs withdraw their liquidity), the remaining LPs receive more rewards per $1 supplied. If TVL proceeds to decrease, the remaining LPs receive more and more APR. Once this process stops, since APR will be too attractive to leave the platform, it will acquire new TVL from the market.<h3 id="strong-follow-wombex-socials-strong">Follow Wombex socials:</h3>Twitter: <a href="https://twitter.com/WombexFinance" rel="noopener noreferrer nofollow">https://twitter.com/WombexFinance</a>Discord: <a href="https://discord.gg/wombex" rel="noopener noreferrer nofollow">https://discord.gg/wombex</a>Telegram: <a href="https://t.me/wombex" rel="noopener noreferrer nofollow">https://t.me/wombex</a>

Understanding vAPR generation and distribution in Wombex

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Wombex Finance

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