What is APY%? How is income calculated?
APY% or Annual Percentage Yield essentially reflects the total amount of rewards from staking projected to be earned over the course of a year (365-day period), taking into account compounding interest.
It is important to keep in mind that the reflected APY% is an average percentage taking into account all of the DeFi and CeFi projects that are included in the staking pool.
APY% is a dynamic value and may fluctuate based on numerous market factors such as supply/demand, liquidity, volatility, etc, and may be higher or lower.
Generated income (yield), if any, is allocated to the corresponding balance once a day. Income on staked coins is calculated based on the lowest value of your wallet balance between the previous and current payout periods.
A trader has an active stake of 1 BTC.
Let’s assume that generated income from staked funds is credited to the wallet balance once a day, at 12:00 pm, with an APY% equal to = 10%
From Monday 12:00 pm to Tuesday 12:00 pm the trader's wallet balance increased to 1.05 BTC, then decreased to 0.99 BTC, then further increased to 1.08 BTC (for example as a result of trading, or withdrawing/depositing funds).
In this case, on Tuesday at 12:00, my yield will be calculated based on the lowest value of my balance from Monday 12;00 to Tuesday 12;00, which is equal to 0.99 BTC.
In other words, my yield will be equal to:
Daily yield = (Lowest value of balance since the latest payout processing period * APY%) / 365 = (0.99*10%) / 365
Daily yield = (0.99*10%) / 365 ≈ 0.00027123287 BTC
Note: Staking payouts, if any, are calculated and allocated to the Wallet balance daily. Yield is generated only for currently active stakes that have been activated prior to the previous payout time frame. Staking yield is calculated based on the lowest value of the balance since the previous yield payout for the corresponding coin/token.