APY on Taraswap

How is APY calculated and how to MEV yields

Incentive APY equation

$$APY = ((T{daily} *P{token}) / \sum{L{usd}} )* 365$$

Where:

-> T is the token emission -> P is the price of the token in USD -> L is the liquidity, in this case, in USD -> multiplied by 365

Let's understand this though an analogy

The Pie-Eating Contest

Imagine there's a pie-eating contest where the prize is a big pie (10 slices). The contest runs for a set period, and participants can join at any time during this period. Here's how it works:

• Joining the Contest:

• When you join the contest, you start eating slices of pie. The more slices you eat, the more of the prize pie you can claim at the end.

• Vesting Period:

• To get the full prize pie, you need to stay in the contest for a minimum amount of time (the vesting period). Think of it as needing to eat a certain number of slices to qualify for the full prize.

• Leaving Early:

• If you leave the contest early, you stop eating slices. This means you might not qualify for the full prize pie because you haven't eaten enough slices to meet the vesting requirement.

Rejoining the Contest:

• If you leave and then rejoin the contest, you start eating slices again, but your previous progress might not count towards the new vesting requirement. It's like starting over in terms of how many slices you need to eat to qualify for the full prize.

5. Other Participants:

• If other people are also in the contest, the prize pie is shared based on how many slices each person has eaten. If you're the only one eating, you can claim the whole pie, but if others are eating too, you only get a portion based on your contribution.