Estimated APR Calculations
APR Calculations for CLMM pools
In a CLMM pool, fees generated when the price trades within a specific tick are distributed proportionally based on the liquidity provided by in-range positions. While it is possible to calculate an accurate APR for an individual tick using the trading volume over a given time period, extending this calculation across all ticks in the pool and among multiple liquidity providers is highly complex. As a result, traditional APR calculations used for constant product pools cannot be directly applied to CLMM pools. Projected returns for CLMMs should be considered as an estimate at best.
CobaltX offers three methods for estimating APRs for CLMM pools, each utilizing a distinct calculation approach. These methods are detailed in the following sections:
Overall Pool Estimated APR
Estimated APR for a user position (two methods of calculation below)
Delta Method
Multiplier Method
Overall Pool Estimated APR
In order to estimate an overall APR for the pool, the following is assumed: Trading fees and emissions per block are extrapolated across all of the liquidity in the pool, including liquidity positions that are out of range.
Delta Method - Estimated APR for user positions
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