I’ve noticed that Anchor display’s its returns as APY, but as I understand, aUST is a yield bearing asset accruing 20% a year. That sounds more like 20% APR not APY, or am I missing something?
Yes, 19.5% APR and 21.3% APY.
So do I have to manually take my profits and re-invest them? It doesn’t make any sense because I’m just buying back aUST…
No, it’s auto-compounding.
It’s actually 19.5% APY auto-compounded, you can check the website as it clearly states APY, the APR is lower.
Ah, you’re right.
A bit confusing since Anchor is advertising its yield as 20% APY everywhere.
But how? Due to Anchor giving me aUST, the yield is directly tied to it. If the yield was exponential, aUST would be increasing by more that 20% a year… Do they periodically give me more aUST as a result of me having some?
No. The value of aUST expressed in UST increases every 8 seconds I believe. You can see your UST value increasing several times per minute. The aUST number remains constant.
Yeah that’s what I mean. If aUST was to follow an exponential curve, the value of aUST, say in 5 years, would not be 20%, but would be way way more, due to compounding. aUST has a accruing value which is linear. This brings me back to thinking it’s APR and not APY…
so that means that Anchor’s yield is actually linear and not exponential?
If you deposit 1000 UST today, and we assume a 20% APY, in one year you’d have roughly 1200 UST after that it’s 1440, then after that 1728…
The indexed value of aUST grows close to linearly as the APY tracks the 19.5%, but every year you’d get the yield and more and more UST.