Altcoins Talks - Cryptocurrency Forum

Crypto Discussion Forum => Cryptocurrency discussions => Topic started by: MUGNIA on March 29, 2022, 06:30:43 PM

Title: APY on the farm
Post by: MUGNIA on March 29, 2022, 06:30:43 PM
i started farming on one of the early exchange platforms the farm had an APY of 300% but over time the APY was getting smaller i would like to ask what causes the APY to shrink ?
Title: Re: APY on the farm
Post by: aiviaa485 on March 30, 2022, 07:52:30 PM
There are many factors that make the APY of a coin decrease in price because the price of the coin being farmed has fallen in price.
If we farm when the coin price is 1 dollar and then the coin price drops to 0.1 dollars, our APY is reduced.
At that time, maybe the APY was correct and the rewards were also true with coins, but if the coin went down, the APY of the price decreased but the total token rewards were correct.
Title: Re: APY on the farm
Post by: TomPluz on March 31, 2022, 09:43:53 AM
Quote from: aiviaa485 on March 30, 2022, 07:52:30 PM
There are many factors that make the APY of a coin decrease in price because the price of the coin being farmed has fallen in price.
If we farm when the coin price is 1 dollar and then the coin price drops to 0.1 dollars, our APY is reduced.
At that time, maybe the APY was correct and the rewards were also true with coins, but if the coin went down, the APY of the price decreased but the total token rewards were correct.

I am not an expert on this but I read somewhere on this topic...is this what they call as impermanent loss? I think this is one of the risks when we are farming or staking though of course we know that there are really good opportunities of good growth in this industry. I need to educate myself on this one because I am actually also interested with farming and staking as the returns can really be so attractive.
Title: Re: APY on the farm
Post by: MUGNIA on March 31, 2022, 05:28:53 PM
Quote from: aiviaa485 on March 30, 2022, 07:52:30 PM
There are many factors that make the APY of a coin decrease in price because the price of the coin being farmed has fallen in price.
If we farm when the coin price is 1 dollar and then the coin price drops to 0.1 dollars, our APY is reduced.
At that time, maybe the APY was correct and the rewards were also true with coins, but if the coin went down, the APY of the price decreased but the total token rewards were correct.

so we can say we experience a loss if the price continues to fall, even though the number of coins we install is still the same amount

last, will this apy go up if the price goes up again?