# Yield Farming

## Overview

Yield farming involves staking LP tokens, acquired from contributing liquidity, in a yield farming pool, where you can earn additional rewards in the form of native XOX tokens.

Yield farming rewards vary depending on the protocol and the current market conditions. Yield farming rewards are distributed in the form of governance tokens (XOX), which can be used for various protocol utilities as well as traded on the platform.

To participate in XOX DEX V1 farms and start earning farming rewards, please refer to the Get Additional Rewards For Providing Liquidity guide.

## Yield Farming Simple Reward calculations

Yield Farm APR calculations include both:

**LP rewards APR**earned by providing liquidity and;**Farm base rewards APR**earned staking LP Tokens in the Farm.

Why? Because when you stake your LP tokens in a farm to earn XOX, you're still providing liquidity to the liquidity pool, so you earn LP rewards as well!

### Calculating Farm Base Reward APR

The** Farm Base APR** is calculated according to the farm multiplier and the total amount of liquidity in the farm, this is the amount of XOX distributed to the farm.

On top of that, farmers receive** LP rewards** for providing liquidity. Here's an example of calculating **LP rewards**:

Example:

### Calculating LP Reward APR

Let's define the following variables:

L: liquidity provided, in dollars

V_24: 24-hour trading volume, in dollars

V_7: 7-day trading volume, in dollars

F: trading fee rate, as a decimal (0.25% = 0.0025)

YF: yearly fees earned by the pool, in dollars

APR: annual percentage rate of LP rewards

Then, we can represent the calculations as:

Calculate yearly fees:

Calculate LP rewards APR:

Using the example values given:

Therefore, the LP reward APR for the given example is 19.5%.

**Simpler Representation**.

**Liquidity:** $140M
**Volume 24H:** $30M
**Volume 7D:** $250M

Calculate yearly fees

Use the 24H volume to calculate the

**fee share**of liquidity providers in the pool (based on the 0.25% trading fee structure): $30,000,000*0.25/100 =**$75.000**Next, use that

**fee share**to estimate the projected**yearly fees**earned by the pool (based on the current 24h volume): $75.000*365 =**$27,375,000**

We can now use the yearly fees to calculate the

**LP rewards APR:**That's**yearly fees**divided by**liquidity:**($27,375,000/$140,000,000)*100 =**19.5% LP reward APR**

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