Fees, volume and APR

All rates on rangebound are yearly and simple (not compounded). A window is 5m, 1h, 6h or 24h.

#Fee rates

Every pool has a fee tier, for example 0.10%. Part of each swap fee goes to the venue's protocol and funds, and the rest goes to LPs:

LP fee rate = fee tier × LP share        e.g. 0.10% × 84% = 0.084% on Raydium

Some Raydium pools charge a dynamic surcharge on top of the tier while the price is moving fast, up to 10% in total. rangebound reads the surcharge from the pool every cycle and uses two rates:

• the last swap's rate, to turn fees into volume,
• the rate now, which a new swap would pay, to estimate re-centring costs.

#Fees and volume

fees paid   = change in the pool's running fee counters, grossed up from the protocol share
volume      = fees paid ÷ fee rate
LP fees     = fees paid × LP share

Fees are exact. Volume depends on the fee rate, so on dynamic-fee pools during very fast markets it can be off by more than usual. See Limitations.

#Pool-level rates

fee APR       = LP fees in the window ÷ TVL × (365 days ÷ window)
active APR    = fee APR × TVL ÷ active TVL
fees / TVL    = fees in the window ÷ TVL                 not annualised
vol / TVL     = volume in the window ÷ TVL

Fee APR spreads the fees over all deposited capital, as if liquidity were spread evenly. It is useful for comparing pools, not for predicting what a concentrated position earns.

Active APR spreads them only over liquidity whose range covers the price. It is closer to what an in-range LP earns, and usually several times higher than fee APR.

#What a range would have earned

For the planner, the width table and vol ratio, rangebound asks what a specific range would have earned: $10,000 over ±w, re-centred on the price as it moved. For every minute:

range fees = LP fees that minute × range liquidity ÷ (liquidity in range that minute + range liquidity)

and zero for minutes when the price was outside the range. The minute's fees are shared with the liquidity actually in range at that minute, not today's.

This matters. Tight LPs often follow the price, closing and reopening every few hours. Using today's liquidity for past minutes misses them, and on one busy pool overstated a tight range's fees by around 75%.

The minute results are added up and annualised.

#Net APR

net APR = range fee APR − LVR − re-centring costs − hurdle

The hurdle is the T-bill yield when measuring against cash, or zero when measuring against holding the same mix of tokens. LVR and re-centring costs are explained in LVR and re-centring costs.

The headline net APR is at the width where it is highest, among ±0.5%, 1%, 2%, 5%, 10%, 25% and 50%.

#Short windows

Annualising 5 minutes or 1 hour magnifies noise: one swap can make a pool read thousands of percent. Use short windows to spot bursts, and the 24-hour window, or seven days in vol ratio, to judge a pool.