Update How To Understand yVault ROI

[tracheopteryx]

@wot_is_goin_on: "I spotted a few issues with "How To Understand yVault ROI" including random $ signs and some odd statements like "A bank's interest rate is constant: either linear or compounding.”, (bank interest rates vary), "Even though yVaults have a compounding effect inherently, this compound interest is not fixed like in a CeFi savings account." (CeFi savings rates often vary, though some are fixed), "Hence, the concept of APY and APR do not apply directly to yVaults." (this concept still applies, it's just that you can't use historic returns to predict future returns - which is why investments come with this exact warning). I posted on Github but it doesn't look like the changes were made. I think it could be improved by giving a bit more info on why ROIs are variable over time as provided in the Powerpoint attachment. For me it's not about linear v compound interest etc, it's simply that the historic returns cannot be used to extrapolate into the future - then we need to say why not. Not sure what the appetite is to re-open it or go over other people's work though, and only my opinion smile "

[miguel567]

REMOVE ROI from terminology. Update wording to website and explain how it is calculated.

From Wot_is_going_on: 2 week ROI = 0.73 USDT / 100 USDT = 0.73%

To calculate an APY it could be tempting to extrapolate the data from 2 weeks using the compound interest formula: 1 year ROI = (1 + 0.73%) ^(52 / 2) - 1 = 20.8%

However, the interest earned over the 2 weeks depends on several variables that would have changed during the 2 weeks and could change again in the future including: The strategy deployed over the 2 week period The price of the token being yield farmed (a higher price leads to a greater return

he amount of funds, including those outside yVaults, yield farming the token (the more funds, the lower the rewards as they are distributed across more capital) Borrowing rates from third party DeFi protocols (the lower the borrowing rates the greater the returns) Ethereum gas fees (higher fees lead to lower returns) Amount deposited into the yVault (the gas fees are shared across more capital but then so are the yield farming rewards) The price of the token deposited (the amount that may be borrowed against a token varies with the price) The collateralization ratio of borrowed assets (maintained at 200% but may vary slightly)

It is therefore recommended to exercise extreme caution when using historic returns to calculate expected future returns.