The purpose of this article is to explain in detail the different THORchain Pools and their APY by weekly basis.
THORChain – Liquidity Pool
On THORChain, swapping is made possible by “liquidity pools” – static pools of cryptoassets other users deposit into the network by granting permission to “liquidity providers”, otherwise known as “LPs”, to trade against,by offering LP fees and block rewards in exchange for yield on their assets. With THORChain, every swap incurs a small LP fee that is then split among the LPs based on the amount they have contributed to the pool.
Additionally, the THORChain protocol distributes a percentage of newly generated $RUNE tokens to LPs as part of its regular payout process.For users who wish to earn yield on their otherwise unproductive cryptoassets, the combination of LP fees and block rewards provides ample incentive.
About THORchain and RUNE
THORChain is a decentralized cross-chain exchange that allows traders to trade assets across Binance Chain, Ethereum, and Bitcoin via liquidity pools.In addition to the trading fee and reward payouts, users can earn RUNE tokens, ThorChain’s native token, by stakeing digital assets in liquidity pools.For RUNE to have access to the THORChain ecosystem and to earn rewards, it must be bonded. With THORChain’s Continuous Liquidity Pool (CLP), trading fees are dynamically adjusted according to the amount of transactions.
Benefits of Continuous Liquidity Pool (CLP ):
- It provides “always-on” liquidity to all its assets.
- Provides trusted on-chain price feeds for external and internal use.
- Users can trade assets at transparent, fair prices without relying on centralised third-parties.
- Provides opportunities for arbitrage to all.
- The pools’ prices are allowed to converge to market prices since the fee appears to be zero. Liquidity providers are able to collect fee revenue in a fair manner.
- Adapts to fluctuating liquidity needs.
Binance Pools – Weekly APY of past 3 months
Here is the graph of Binance Pool APY for the past three months, which is given on a weekly basis.The total APY of the last 3 months was 123.79. The lowest Total Weekly APY is 0.01 (ETH.FOX) and the highest is 11.64 (BNB.AVA). Here ,the total weekly APY shows seasonality every 6 weeks, with a low in week 4 and a high in week 6.
The BNB.AVA swap pair has shown the highest weekly APY of the Binance pool on Sept 20,2021. Initial APY of Binance Pool is low and after Sept 6,2021 it has gradually increased in almost all combinations of swap pairs.
Bitcoin, Bitcoin Cash & Litecoin Pools – Weekly APY of past 3 months
We can see in the graph below that Pool LTC.LTC contributes the most to Total Weekly APY (36.94%) of the three pools.There is a 32% difference between the lowest Total Weekly APY (BTC.BTC) and the highest Total Weekly APY (LTC.LTC). The maximum Total Weekly APY of 1.55 was observed from October 17-23, 2021.The Weekly APY shows a decreasing trend. From Oct23,2021 on, all three pools — LTC.LTC, BTC.BTC, and BCH.BCH — are declining in APY.
Ethereum Pools – Weekly APY of past 3 months
A total of 123.79 APY was collected by Ethereum pool during the past three months.The graph shows that 0.01 is the lowest Total Weekly APY (ETH.FOX).The maximum Weekly APY was recorded in W43(Oct24-30), 2021 with 12.73. Total Weekly APY shows an increasing trend here. The weekly APY on Oct 17-23, 2021, almost fell into negative values for ETH.DODO, ETH.AAVE, ETH.CREAM and ETH.RAZE. On Oct 17-23,2021, the following ETH swap pairs have suddenly reached very high APYs compared to other swap pairs: ETH.HEGIC,ETH.USDC,ETH.ALCX,ETH.USDT and ETH.ETH.
Observation
From the above Analysis,
- Considering Binance Pools, there has been an increasing trend in weekly APY from Sept 6th, 2021 on.BNB.AVA collects a higher APY than other swap pairs.
- The Bitcoin Pools APY is increasing from Sept 19-25,2021 onwards, but it suddenly begins to decrease from Oct 23-30,2021 onwards. Compared to the other two Bitcoin pools, the LTC.LTC swap pair is collecting more weekly APY.
- In the case of Ethereum Pools, We can see a big change in weekly APY on Oct17-23, 2021, in which some swap pairs went up in weekly APY but some reached negative values.