Average AMM POOL APR (estimated)
The graph above shows the liquidity pools for
- ETH/USDC
- LRC/ETH
- LRC/USDC
- IMX/USDC
- WBTC/ETH
You can visit the original source yourself at https://loopring.io/#/invest
I chose these pools because the first four had the most liquidity locked back in May. Also WBTC because it's Bitcoin.
Observations about the spikes
- 2022-05-22 Many LRC holders are leaving Coinbase and other CEXs because of CEX uncertainty and risks
- 2022-06-13 Liquidity Pool Rebalancing: See this post
- 2022-07-11 GME NFT Marketplace Beta Release
- 2022-07-19 Clueless about this spike. More activity from the NFT Marketplace? If you know more, please tell in the comments!
I calculated the median and average estimated APR for the whole timeframe:
- Start: 2022-05-16
- End: 2022-07-21
| eth_usdc | lrc_eth | lrc_usdc | imx_usdc | wbtc_eth | |
|---|---|---|---|---|---|
| MEDIAN | 4.81% | 5.87% | 15.88% | 10.31% | 1.47% |
| AVERAGE | 34.07% | 6.80% | 19.03% | 11.75% | 2.08% |
Example: Read it like this: MEDIAN of the estimated APR from 2022-05-16 until - 2022-07-21 for eth_usdc is 4.81%.
Sorry about the crooked timeframe. It has nothing to do about the calculation but more about my own schedule to write a post.
Take-Aways
- ETH-USDC has this crazy liquidity pool rebalancing event where for a short spooky but beautiful moment in time, you would get 5,760.57%.
- LRC-ETH will most likely yield the least impermanent loss. With liquidity rewards and about the same performance of both coins, it might yield greater rewards than staking ETH (~4,2%) (https://ethereum.org/en/staking/) by itself.
- LRC-USDC has the most consistent highest APR from any of the TOP 4 pools by liquidity. Because it's a stablecoin pair you must also consider impermanent loss more than with a non-stablecoin pair.
- IMX-USDC actually has consistently high APR of 10,31% by median. If you like to own the whole GME crypto basket LRC+IMX, you can let the crypto part grow quite nicely in the LP.
What can be done better?
- The "estimated APR" is calculated based on the 24h volume on Loopring's AMM swaps and orderbooks and shown in your Loopring app and the invest page[https://loopring.io/#/invest].
- To get the true APR, the 24h volume and the collected swap fees must be considered to calculate the 24h APR. I think... I haven't fully dived into this one out so I would appreciate assistance.
A full APR calculation must also consider:
- Impermanent Loss
- different price fluctuations of the pairs
- liquidity provider rewards ('official protocol')
What is the goal?
- My goal is to make the AMM pools as a liquidity provider more approachable. I am a liquidity provider myself but I find it hard to grasp what the actual income is. Questions regarding the liquidity pools frequently appear in this sub.
- Find the definitive answer whether LRC-ETH with estimated median APR of 5,87% is more preferable than staking ETH natively with ~4,2%. (https://ethereum.org/en/staking/)
- the current estimated APR does not take impermanent loss and no LP rewards ('official protocol') so the above APR is just a preliminary result
What else do you want to know?
I am currently setting up a server for this project that let's you query the data dynamically including the other pools/volume/liquidity. What else would be interesting to find out or show about the data?
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