Understanding Metrics
This article is all about metrics, what they are and what they tell us.
Metrics, stats, data, and numbers are everywhere in crypto and sometimes all the jargon can be tough to follow. After reading this article, the next time you see terms like circulating supply and diluted market caps, you will know exactly what they mean.
Annual Percentage Yield (APY)
As crypto investors, one of our major interests is in knowing what return we can expect when maximizing returns on tokens. This process of maximizing returns can take different forms such as staking, yield farming, liquidity mining, etc.
When picking the right yield generating option, we usually come across the term APY.
The annual percentage yield, or “APY,” is the rate of return that an investment provides when compared to the initial investment. APY also considers compounding interest.
When you see an investment offering a 5% APY, it is important to remember that the 5% is on an annual basis. If the investment pays out monthly, the monthly rate of return will be the 5% APY divided by 12 months which would equate to a monthly return of 0.41%.
The terms APY and APR are often used interchangeably which is not exactly accurate as they do differ. Let’s look at APR.
Annual Percentage Rate (APR)
The annual percentage rate, or APR, measures the amount of interest an investment earns over a year.
The key differences between APY and APR are as follows:
- APY takes compounding interest into consideration, the APR does not. So, 5% APY would yield a higher return than a 5% APR
- APY will most commonly be advertised by investment products. Whereas APR is more common for lending products as the APR will be the rate based on the initial amount borrowed.
Staking/Stakers APY
The staking APY follows the same principle as the APY described above. It is the return on investment that someone can expect from participating in staking.
A common issue for crypto stakers is to get confused by this as the term APY stands for “annual” percentage yield, whereas many staking platforms will offer products with:
- 7-day APYs
- 14-day APYs
- 30-day APYs
A 5% APY on a 7-day APY staking product does not mean the staker will receive 5% in those 7 days, unfortunately. That is where that word “annual” comes in.
The 7-day APY is an annualized APY using 7-day returns. It is calculated by taking the net difference in the price from 7 days ago and today and generating an annual percentage. Here is how that looks:
APY = (X − Y − Z) ÷ Y × 365/7
Where:
- X = the price at the end of the 7 days
- Y = the price at the start of the 7 days
- Z = any fees for the week
Circulating Supply
The circulating supply of a token is the number of coins available in the market and public hands. This can be compared to how many of an asset’s shares there are in the traditional stock market.
Note that circulating supply is different from total supply. Many projects use different vesting schedules and plan to release more tokens at future dates.
Circulating supply can be found on sites like Coin Market Cap and Coin Gecko.
Max Supply and Total Supply
The Max supply tells us how many coins will ever exist in the lifetime of the cryptocurrency. It is analogous to the fully diluted shares on a stock market.
Total Supply is the number of coins that have already been created, minus any coins that have been burned. This is analogous to the outstanding shares on a stock market.
Fully Diluted Market Cap
The Fully Diluted Market Cap shows us the market cap if the max supply were in circulation.
The Fully Diluted Market Cap (FDMC) = price multiplied by max supply.
We hope this helps clear up any questions about crypto metrics in general and Sheesha Staking metrics specifically.
Why Stake with Sheesha?
Sheesha Finance is a leading DeFi Staking Platform. We provide benefits from a premium, diversified cryptocurrency portfolio, with a staking platform that rewards investors of any size, from small to large ticket holders.
We have built an Investment and Incubation platform, Sheesha Foundry, with an extensive network of partners who are thought leaders in the crypto space. This allows us to consistently discover promising projects in their early stages.
Our easily convertible assets can be used to maximise rewards and gain exposure to existing and upcoming DeFi projects. With plans to become a member-managed Decentralised Autonomous Organisation (DAO), Sheesha Finance is dedicated to upholding full transparency and integrity within the DeFi space.
Sheesha staking can be done with $SHEESHA tokens. These can be purchased on Bancor, Uniswap, PancakeSwap, and QuickSwap.
Stake now, passively earn rewards, and join an ecosystem of high-potential crypto projects at Sheesha Finance.
