Yields
Where do the yields come from and how do you calculate it?
Hippo V3 vaults yields come from the LP fees incurred by people swapping the paired token in the pool on Pancakeswap (PCS) and the $CAKE farming rewards emitted by PCS Masterchef for staked LP position
The displayed APYs on Hippo vaults are estimated from 24H rolling average of the LP fees and $CAKE farming rewards. Hippo also performs constant price range rebalancing to ensure the yields are higher than the position Impermanent Loss (IL)
Summarizing, net real yields are influenced by
swapping volume (+)
farming rewards (+)
token pair price volatility (-)
LP returns, especially on concentrated liquidity DEXes is an active academic research topic, more details can be found here
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