Change in APR calculation and representation
Since the successful launch of Crescent Network on April 13th UTC, the team has worked day and night over the past week to provide a stable and secure DeFi Hub, and we are very thankful of the overwhelming interest and participation in our proposed direction for inter-chain finance.
We have first handedly seen the community grow in both number and the degree of contribution that we can make to the advancement of not only the Cosmos Ecosystem, but way beyond into blockchain technology itself. The potential that we see for this network is endless with the help of its active and vibrant community.
Although we would like to be, “perfect” is something far from a human characteristic, and we have learned a lot about how we can provide a more intuitive and simplified platform for users that we had not considered during the design of Crescent. We have listened, and will continue to do so, and user feedback is highly appreciated.
That being said, the Crescent Network dev team acknowledged a necessity to make adjustments in the Crescent experience for our users.
On April 13th, the Crescent Foundation proposed an initial farming plan for six liquidity pools including 5 coins. The incentivization and farming weights were passed by governance at 4/18 UTC, at which incentivized liquidity farming began . The first rewards were distributed to users at 4/19 UTC, at which the farming APR(Annual Percentage Rates) were visible through the Crescent DEX UI.
Previous Calculation Formula:
The APR of the displayed UI was based on the following formula as the historic APR:
The number of total CRE rewarded for the target pool was calculated as: (number of daily rewards CRE’s per pool token) X (number of FarmedStaked pool tokens). This formula was designed to accurately display based on received rewards, to incorporate cases where more than one farming plan is implemented into a single pool in the future, rewarding more than one type of token is distributed as farming rewards. However, this formula’s “number of Farmed pool tokens at the last epoch” of the numerator took into consideration the FarmQueued of the last epoch as FarmedStaked, because the FarmQueued of the last epoch was already transitioned to FarmStaked at 00:00 UTC. This resulted in some over-calculation of historic APR originally targeted to, which depends on the ratio of number of FarmStaked pool tokens during the last epoch period and number of FarmQueued pool tokens during the last epoch period.
We realized later on that this method may inconvenience users in their asset management, as it does not present an accurate representation of expected APR for the next epoch.
Current Calculation Formula:
From today, the UI will instead display the expected liquidity farming reward APR through the following formula:
In the above equation, the denominator is the same as the historic APR to represent the dollar value of the LP’s farmed TVL (not including deposit without farming) while the numerator becomes different to exactly calculate the farming rewards for the LP farmers (in) the next epoch from the farming source. For example, currently number of total daily rewards CRE's to all the pool is 93700 for this year and weight of the total rewards to the target pool for bCRE-CRE pool is 0.25. (Initial Farming weight proposal)
Through this change in calculation and display, accuracy of communicated information will be vastly enhanced, allowing users to strategically make their contributions to our network and yield accurate rewards.
There are absolutely no problems with our blockchain core, and the amount of farming rewards allocated for daily distribution does not change. We will continue to make necessary adjustments to better the experience of users as the network evolves. We are learning from the community in ways that develop Crescent into a DeFi Hub that anyone can come and immediately become part of the expansion.
Detailed information on liquidity farming APR display and calculation change here.
