Calculating Potential Liquidity Staking Profits On Alcor Exchange
If you are planning on liquidity staking on Alcor but aren't quite sure if its worth it or, even worse, have no idea what you're doing (lets face it. Usually you don't.) there are a lot of questions that need answers. How can I tell if I'm better off staking? What the heck does that button do? Wait, that number is going negative, is that supposed to happen? Is this mole cancerous?
All of which can be answered - You can't (yet) - Its the eject button, don't touch it - Yes but you're too dumb to understand why - Most definitely, you have less than 5 years to complete your bucket list. In that order.
Fear not. By the time you are finished, you will have one tiny little piece of a puzzle too big for any of us to understand. Now lets put your 2 brain cells to work and get crackin'.
Note - I'm not going to cover what liquidity staking is in this article. There is plenty of information out there. You should probably look that up first if you don't know. This is specifically for how to calculate *potential* profits. (Also, this is not financial advice. If it was - why the hell would you be taking advice from a stranger on the internet you Dorito dust covered husk)
(I'm not talking about the breakdown you had when your wife's boyfriend forgot to bring you home a slice of cheesecake from their date at The Cheesecake Factory)
- Liquidity Source Fee
- Calculating Total Liquidity Pool Profit
- Estimating your own pool share %
- Calculating your earnings with your pool share %
- Things To Know That Will Leave You With More Questions
Liquidity Source Fee
Every time you and your hoard of stinky friends converts 1 shitcoin into another, you are paying a tiny fee into the liquidity staking pool. In this case on Alcor the liquidity source fee is 0.3%.
This means that 0.3% of every single transaction gets put into one pool to be divided between every single person that is staking in the liquidity pool. I know it confusing to remember 0.3% because its not a whole number, but try your best. Maybe write it on your wall with your favorite red crayon. We are going to come back to this later.
(Look, I'm sorry for calling your friends stinky. Really, I promise I am. It was insensitive of me to insinuate that you actually have friends.)
(This isn't the volume that you have to turn up on the TV so you don't have to hear your wife and her boyfriend making love after they made you sleep on the couch)
Volume is the total amount of shitcoin being traded in a given time period. This means that the 24 hour volume is the total amount of coin being traded in *GASP* 24 hours. The 7 day volume is the volume of a shitcoin being traded in *ZOINKS SCOOB* 7 days.
WHY DOES VOLUME MATTER? Because we need it to calculate how much shitcoin is in the total staking pool that you want a piece of.
Lets take a look at Where to find the volume on the WAX to Aether pair - And for the love of God try not to have a seizure from all of the pretty colors.
First - I know right off the bat at least half of you Mongoloids are going to say "WhErE iS tHiS pAgE?! hOw Do I gEt ThErE?! O.o" This is the markets section. Look at the pretty blue box that says "Markets".
Second - If you are following along on the WAX/Aether pair, make sure you are in the WAX Mainnet (Pretty pink box - Which ironically is also your wifes OkCupid profile name). The math still works the same no matter what pair you are trying to liquidity stake on.
We want to look at the volume for Aether/Wax (Red box -and YES Aether/WAX is the same as WAX/Aether). Here we can see the 24 hour volume (green box) is 1,621,924 and the 7 day volume (yellow box) is 14,524,180.
HERES YOUR TAKEAWAY WITH THIS - Look at the 24 hour and 7 day volume. Ya dunce.
Calculating Liquidity Pool Profit
I am only going to say this once. The number what we are about to calculate IS NOT YOUR OWN PROFIT. This is the profit of the entire pool. Cool your jets Turbo, we will see what your individual profit is soon.
Remember that .3%? We are going to calculate .3% of the volume. Most Calculators have a % button so the math is Volume x .3% (Yes actually press the "%" button). If this is too hard for you, and I know it is, Use .003 instead of .3%. Its the same thing. so - Volume x .003
The 24 hour volume is 1,621,624. so we know the math is 1,621,624 x .003 = 4,865. (Yes - we rounded to a whole number)
The 7 day volume is 14,524,180. remember - Volume x .003 - 14,524,180 x .003 = 43,576
Now we know that the total WAX in the Staking pool for 24 hours is 4,865. For 7 days its 43,576. With this in mind, we can move on to the next step.
Estimating your own pool share %
Now things are going to get a little convoluted. God help us. First, lets assume you have a bunch of WAX you want to stake. Lets call it an even 1000 WAX. When you stake into a liquidity pool on Alcor it requires a 50/50 split of that pool. This translated into the language of your people, the Simpletons, means that if you have only WAX you want to stake into the WAX/Aether Pool, it wont work. You need equal values of Both WAX and Aether.
You need to take half of your WAX and convert it into Aether before you stake it. HOWEVER if you don't want to stake anything yet and you only want to figure out how much your earnings will be, that is entirely possible! Here's a breakdown of how to get a quote before jumping face first into this thing like it's a box of twinkies.
Gold Boxes - Go to the "Swap" tab on the top and then "+ Liquidity" just below that. You will now be in the add liquidity menu.
Red Boxes - Remember, only enter HALF of your total amount of WAX you want to stake. The other half will need to be converted into Aether. All you have to do is enter the amount of WAX into the box and it will automatically fill in Aether with whatever its equivalent Wax value is. (remember, your total WAX value is still 1000. Now 500 of it is just converted into Aether.
Pink Box - This is the number of LP-T's (Liquidity Provider Tokens) you receive for staking that amount. Without getting too far into depth on LP-T's, Its how the system keeps track of your total contribution to the liquidity pool. It cannot use the current Value of your wax and Aether because their "value" is always changing. Instead, it gives LP-T.
Green Box - (This is the important one) - This is what your take of the liquidity pool share will be. At the time of this quote, If I were to stake 1000 WAX at a 50/50 split (500 WAX and 612483 Aether) my total claim to the pool share would be .11%.
To summarize, if you want to find out how much your pool share size will be, go into "+ Liquidity" for that pool and type in 1/2 the amount of WAX you're looking to stake. Again, remember that this is a 50/50 split so it will automatically fill in its paired value on the other shitcoin.
Calculating Earnings With Pool Share %
Congratulations! you made it this far without drooling all over your keyboard and shorting it out. That or you just skipped ahead. My bet is on the latter.
This is the magic number you wasted your time for. All that's left for us to do is take your Pool Share % and multiply it by the Staking Pool Profits we calculated earlier.
Remember, our 24 hour staking pool was 4,865. Our 7 day pool was 43,576. You remember that .11%? that is the total amount of that total pool you receive.
4,865 x .0011 = 5.35 WAX per 24 hours
43,546 x .0011 = 47.9 WAX per 7 days
This number wont be exact moving forward. Volume could go up or down either increasing or decreasing your earnings. This is just to get a good estimate on roughly how much you can earn daily or weekly if you stake your shitcoin into a liquidity pool.
- Multiply your volume by .3% to get total pool earnings
- Multiply your pool share % by total pool earnings to calculate your potential earnings
- Get that mole checked out and for God sake eat a salad
Things To Know That Will Leave You With More Questions
- Your "earnings" are a damn finicky thing and will need a whole new article to explain. Just know that the total value of your earnings will be in coin 1, coin 2, or mixed in both. There's a strong possibility 1 of them will even show up as a negative value. No you aren't losing your money, Yes there is an explanation. No it isn't here.
- Your Pool share % WILL CHANGE. Think of it as a pie - That should be super easy for you - Your total staked amount = a piece of the pie. The more Shitcoin people stake into this pie, the smaller your piece will get. The more people remove their stake in the pie, the bigger your piece will get. Spoilers, it will likely get smaller over time.
- Volume pretty heavily effects your earnings. Less volume = Less liquidity source fee being split between everyone. More volume = more being split.
At the time of writing this article I have plans to work on others covering different aspects of liquidity staking and Alcor as a whole. For now, I hope this one tidbit of information helps. If you have any questions or need something clarified, don't hesitate to ask. I know you're not above taking charity and come to think of it, neither am I. Don't forget to tip your dealer.
Now Go forth and prosper, Dipshit.