It all startet with a discussion in a Telegram group of a yield farm. I shared there my spreadsheet that caluclates the APY on different autocompounding vaults. Nearly nobody believed the math. This lead me to an experiment with an interesting outcome.
The Experiment
For the experiment I created a new wallet and bought exactly 0.000010357181703688 BONE-USDC LP on Quickswap. You can find the transaction on Polygonscan.
In the next step I deposited exactly 0.000005178590851844 BONE-USDC LP into Beefys Polygon vault and in Kogefarm. Again the transactions are visible on Polygonscan. After 24h I will withdraw from both vaults and compare the outcome.
Beefy Deposit:
Block: 16418716
Time: Jul-02–2021 21:20:43 UTC
TX: https://polygonscan.com/tx/0xf77ff4594afb076163b968dd14a7f52bdce4036ebaa44d1c915e7b3291065015
Total staked in the vault: 317520$
Kogefarm Deposit:
Block: 16418719
Time: Jul-02–2021 21:20:49 UTC
tx: https://polygonscan.com/tx/0x66755b192e7a40ad0593dc8fc8a92cbc61608c1f818cfdf32647af596f80fb11
Total staked: 70541$
Some minutes later a Member of the Telegram Group pointed to me, that it would be clever to take a note of the total staked amount in the vaults. So I made some screenshots:
As you can see, the daily APR on Beefy is way higher than on Kogefarm. This made me curious as it is mathematically impossible. Beefy charges 4.5% reward fee plus an additional 0.1% withdrawal fee while Kogefarm only charges 1% reward fee.
Halftime
After~12h I took a look on both vaults. I just took some screenshots there:
Again Beefy states a way better APRD than Kogefarm. I started to question my math in the spreadsheet or if the TVL had any issue on this. In the meantime around $55'000 were withdrawn from Kogefarm. I was even more curious about the outcome. But a few hours later I got asked for a further snapshot.
75% have passed
This is the first time Beefy is 0.01% behind Kogefarm with its APRD.
The Final round
After 24h 10 minutes I withdrew my LPs from both vaults. The 10min came from Beefys slow compoundrate. They compound this vault only about every 20 minutes. As the result shows, it was in favor of Beefy that I waited. The outcome would have been worse for beefy if not.
Before I go into the numbers, here are the screenshots. I had to take two from Beefy as their RPC was overloaded a bit and it took an eternity for the values to show up.
This was the first time Beefy was clearly behind Kogefarm in terms of APRD. After I made every transaction on the blockchain, I started to calculate the numbers. Before I dive into the numbers, here is the log from the Blockchaintransactions:
Compound on beefy before withdraw:
Time: Jul-03–2021 21:29:35 UTC
TX Hash: https://polygonscan.com/tx/0xa38435db195c2d92ce6c8c4bf30abe7cd89ca098add046a2cef015b5f0fae37d
Kogefarm withdraw:
Time: Jul-03–2021 21:30:13 UTC
TX Hash: https://polygonscan.com/tx/0x070a8a71215f62a3fd2fb3e61707ebe04f5ca68201ded5c65e4ceb290b84542b
Total LP Token compounded: 0.00000591437383828
Total LP Token received: 0.00000591437383828
Beefy withdraw:
Time: Jul-03–2021 21:30:35 UTC
TX Hash: https://polygonscan.com/tx/0x3380a9b5b19b8a3bbbf056c8409458be83dc0f3b37a52a1ccb6559875c77df6e
Total LP Token compounded: 0.000005900157387111
Total LP Token received: 0.000005894257229724
Remember: The LP Token from Beefy was after a compound. Without the wait for it, the numbers would have been lower and therefore worse for Beefy.
Juggling with the numbers
APRD Calculation:
LP Token invested per Vault: 0.000005178590851844 => 100%
Koge:
LP Token after 24h 10min: 0.00000591437383828
LP Token after withdraw: 0.00000591437383828
LP Token gain absolute: 0.000000735782986436
LP Token gain APRD: 14.20816989575458248689960704%
Beefy:
LP Token after 24h 10min (brutto): 0.000005900157387111
LP Token after withdraw fee (netto): 0.000005894257229724
LP Token gain absolute (brutto): 0.000000721566535267
LP Token gain absolute (netto): 0.00000071566637788
LP Token gain APRD (brutto): 13.93364635111236025308869645%
LP Token gain APRD (netto): 13.81971270476339133307206658%
Formula for APRD calculation: <LP Token gain absolute>*100/<LP Token invested per Vault>
The numbers don’t lie. Kogefarm outperformed Beefy. Even Beefy is showing most of the time equal or better APRD than Kogefarm. Beefy is lying to it’s customers!
Conclusion
Both, Beefy and Koge are inflating the APY displayed on the homepage. They both include some estimated LP gains from Quickswap. Beefy tends to overestimate the returns while Koge is close to reality. At least both claim to include their fees in the APY calculation. Sadly, both do not disclose their formulat they use to calculate the APY. Therefore the displayed APRD and APY can’t be calculated manually.
As proven in the screenshots Beefy often display a better APY than Koge. This isn’t the case. Koge provided netto, after withdrawfee from Beefy, 0.38845719099119115382754046% (brutto: 0.27452354464222223381091059%) more gains for you in 24h. This gap will only become bigger and bigger, the longer you stake on Koge due to the compound interest effect.
TL;DR
Koge gives you around 0.4% more APRD after 24h than Beefy. This gap grows per day due to the compounding effect. Also Beefy is lying on its APRD.
The upcoming experiment
Shortly after I finished this experiment and shared my findings in the Telegram Group I got asked how this compares to manual compounding. I already have the numbers and so on. This will be my next article here on Medium.
