Today someone texted me asking:
Should I borrow $BNB to participate in #BinanceLaunchPool🔥 project #OMNI or not? And is there any way to calculate APY?
Before answering this question, I think you should just look at this article of mine for reference.
If you have a loss or profit, you eat it, you drink it, don't curse at me or comment obscenely. OK.
Reply :
How to calculate APY when borrowing BNB to join Launchpool Omni:
APY (Annual Percentage Yield) is the annual earnings yield. When borrowing BNB to join Launchpool Omni, you need to calculate the APY to know the potential profit after one year.
Formula to calculate APY:
APY = (Profit / Investment Cost) x 100
In there:
Profits: Potential profits from Launchpool Omni, including expected value of new tokens and profits from staking new tokens (if any).
Investment costs: Investment costs include:
BNB Loan Amount: The BNB amount you borrowed to participate in LaunchpoolOmni.
Loan interest rate: Annual BNB loan interest rate.
Transaction fees: Transaction fees for borrowing (BSC network is not expensive, but if it is an ERC 20 network, be very careful), selling new tokens and repaying the loan.
For example:
Suppose you borrow 100 BNB with a loan interest rate of 10% per year. You join Launchpool Omni and receive 100 new tokens. The new token price is expected to be $10 and you stake the new token to earn an additional 5% profit each year.
Profit:
New token value: 100 tokens x $10/token = $1,000 Staking profit: $1,000 x 5% = $50
Investment costs:
BNB loan amount: 100 BNBLoan interest rate: 100 BNB x 10% = 10 BNB
Transaction fees: Let's say the transaction fee is 1 BNB
Total investment cost: 100 BNB + 10 BNB + 1 BNB = 111 BNB
APY: (1,050 BNB / 111 BNB) x 100 = 945.95%
In this case, the APY is 945.95%, much higher than the loan interest rate of 10%. However, you should note that these are just examples and actual profits may vary.
Advice:
Only borrow BNB if you have the ability to repay. Research the Launchpool Omni project thoroughly before participating. Calculate the APY carefully to ensure that the potential returns outweigh the risks. Diversify your portfolio you to minimize risks.
*Wish you success with this article.
