Have you acquired your L1-LP tokens and are considering investing in Layer 2 LP (L2-LP)?
In this article, we describe how L2 LPs work as well as the reward structure to help users have a better understanding of these LP tokens and how they work.
Let’s start by describing the naming structure of these L2 LPs
L2 LPs on our “Home” page
Figure 1. An L2-LP farm on our “home”
A list of available L2 LP farms can be found on our homepage. This is read as “matching token” + “L1 LP pair”.
In Image 1 above, this shows the ADA plus the ADA/VYFI L1-LP token pair.
Trading L1 LPs
Figure 2. An example of an L1-LP in the DEx
If you contact our DEx to trade, you can buy L1 LP tokens directly on the market. You can tell which L1 LP pair it is by looking at the pair between the “_”. The structure for reading L1 LPs is as follows:
“DEX of LP”_”LP Pair”_”LP” (identifying liquidity pool token)
Reading L2 LPs
Figure 3. Your L2-LP tokens under “Your Liquidity”
Under the Your Liquidity tab you can see your L2 LP as in the image above. These use the formal L2 LP token name (also as it appears in your wallet), which is a combination of how the LPs are represented on the homepage and the L1 LP from stores. Let’s go through:
“ADA”/”VYFI_ADA/VYFI_LP”” “LP”
Will be read as:
“Token paired with the L1LP”/”L1LP” “LP” (to indicate it is an LP token)
So this would be the L2LP pair consisting of ADA and the ADA/VYFI L1LP.
Estimation of L1LP content within L2LP
In this tab we can see the amount of ADA and LP tokens that the user is holding in the L2 LP. We will soon integrate a method to display the contents of the L1-LP as well. You can quickly estimate the contents of the L1 LP by dividing the ADA contents of the L2 LP by 2. Using the example of Figure 3:
Pooled ADA: 11,138
Pooled LP VYFI_ADA/VYFI_LP: 4,985,159
We would divide the pooled ADA by 2, giving a value of 5.569 ADA + 5.569 ADA to VYFI. Note that the pools between L1-LP and L2-LP are not perfectly arbitrated, so this is an estimate.
The total estimated value of the L2-LP is 11.138ADA + 5.569ADA + 5VYFI = 15.707ADA + 5VYFI. We will shortly display this value on this page. You can see the current ADA total of the L2 LP you own by expanding the L2 LP on the “Home” page and reading “Pool Ownership” as shown in Image 4.
Figure 4. “Pool ownership” shows the ADA value of L2-LP held by the user.
How to calculate farms with L2LP tokens.
There are four APR sources that make up L2 LP returns. These are:
Farm by L-LP
Farm from L2-LP
Fees from L1-LP
Fees from L2-LP
It is important to remember that the APR received from the L1 LP farm is twice the value of the L2 LP (since it is composed of the L1 LP equal to its value in ADA). about half as much as in the L1-LP. You can hover over “APR” for the L2 LP pool to see the impact of each of these four sources.
MORE INFORMATION ABOUT FARMING WITH VYFINANCE:
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