With the upcoming launch of our BAR and DEx, we have decided to build some projections for our BAR’s APY, and the impact daily volume will have on the yield.
The principal source of income for the BAR is going to come from our DEx. As 0.1% of every trade will be distributed to the BAR, we can estimate the earnings given a total volume traded on our DEx. For every one million ADA in trading volume, one thousand ADA of $VYFI will be purchased from the market. The relationship between DEx volume and BAR distribution is linear.
This allows us to estimate BAR APY for a given volume traded on our DEx. Image 1 below represents this for the price of $VYFI on the 02–15–23.
From the chart, we can see this linear relationship between APY and volume traded. It is also important to note, if the price of $VYFI increases, the APY will reduce. The reason for this is that for every ‘serve operation’, the BAR will purchase less $VYFI from the market.
The daily volume on Cardano DeFi (as of 02–15–23), is 7.06M ADA. Our first target is to have a penetration rate of 20% of this market. For this day, that would represent 1.4 Million ADA in volume on our DEX, 1400 ADA being sent to our BAR.
If we can reach an average daily volume of 1 Million ADA, then the return with 3M, 5M, and 10M $VYFI staked at the BAR will be 37.21%, 22.32% and 11.16% respectively. If $VYFI were to stay at its current price of 0.32 ADA, this would represent a total purchase of 1,140,625 $VYFI from the market. This would equate to a redistribution of about 4% of the total supply that will be available after the first years farm (30,000,000 tokens).
Image 2. Is a graph showing the daily $VYFI distributed to the BAR, at a price of 0.32ADA per $VYFI.
The example we used above represents a daily volume of 1 Million ADA on our DEX. As it is a linear relationship, if we were to average 2 Million ADA daily volume on our DEX (assuming the price of $VYFI stays the same), we would expect to repurchase about 8% of the total supply after 1 year.
These numbers do not represent all sources of $VYFI to the bar. Initially, our Lottery and NFT royalties will all be distributing $VYFI to the BAR. This shows that as long as we can sustain an intermediate volume, given our low supply of our token as a DEX, we have the capacity to really positively impact the price of $VYFI with the First Redistribution Mechanism on Cardano!